1. LIMs Limited is a local manufacturer of PPE materials. Due to COVID-19, the entity's revenues are booming significantly. Consequently, the directors have declared dividends on December 30, 2019 as follows:

Type of shares Number of shares Dividends per share

Ordinary shares 500,000,000 $0.20

Irredeemable preference shares 1,000,000,000 $0.10

Redeemable preference shares 100,000,000 $0.25

Required:

a. Prepare the relevant journal entries outlining the declaration of dividends.

b. Prepare the relevant financial statements extracts for the declaration of dividends

Question 2

ABC Limited currently has ordinary share capital of $100 million comprising 50 million class A ordinary shares. At the most recent board meeting held on July 31, 2020, the directors voted unanimously in favour of a one for five bonus issue. At the date of the bonus issue, the entity had share premium and retained earnings of $20 million and $30 million respectively. Subsequently to bonus issue, the directors convened an extra-ordinary general meeting on September 15, 2020 where it was agreed that the entity will make a rights issue of one new share for every four held at a rights price of $2.50 each.

Required:

a. Prepare a journal entry to reflect the bonus issue.

b. Prepare the relevant journal entry for the rights issue.

c. Show the total shareholders' equity before and after the bonus and the rights issue.