Part A

The following section is taken from RedUnion Ltds statement of financial position at 31 December, 2020.

Share capital	5 000 000
Reserves	212 000
Retained earnings	42 000

The directors approved a transfer of $20 000 to reserves. This was recorded in the ledger and is the only item affecting reserves during the year.

Cash dividends declared for the year ended 31 December 2020 were $21 000.

RedUnion Ltds profit for the year ended 31 December 2020 was $60 000.

Required:

1) Journalize the dividends declared. (1 marks)

2) Prepare a statement of the changes in retained earnings as at 31 December 2020. (3 marks)

Part B

Prepare journal entries for the following two transactions: (3 marks)

On 4 September, XYZ Ltd issued a $12 000, 10%, 3-month note to purchase inventory costing $20 000. The remaining amount was paid by cash.

On 30 September, XYZ Ltds employees earned wages of $30 000, assuming that these wages earned will be paid on 5 October. PAYG withheld tax was at the amount of $2 400.

Part C

Ross Ltd and Yang Ltd, two entities of roughly the same size, are both involved in the manufacture of dancing shoes. Each entity depreciates its PPE assets using the straight-line method. An investigation of their financial statements reveals the following information.

	Ross Ltd	Yang Ltd
Profit	900 000	560 000
Sales	12 600 000	10 300 000
Total assets (average)	3 750 000	4 480 000
PPE assets (average)	2 000 000	3 360 000
Accumulated depreciation	937 500	1 420 000
Depreciation expense	130 000	420 000

1) For each entity, calculate average age of PPE assets and average useful life (2 marks)

2) Comment on how to interpret these ratios (1 marks) Word limit: 100