Question 4

(a) Atlas Company has 8,000,000 outstandning ordinary shares with a par value of $1, on 10 December 2019 the company has declared 25% cash dividends payable on February 12, 2020.

Required

(i) Prepre the enrties for each of the date above, assuming the dividends represent distrubution of profit.

(ii) Prepre the entries for each of the date above, assuming the dividends above has partial return of capital which equal to $ 400,000. (10 marks)

(b) Hercules Company has transferred to shareholders some of its investments in securities costing $11,500,000 by declaring property dividends on December 13, to be distributed on January 30 to the shareholder of 15 January. At the date of declaration the fair value of the property was $13,000,000

Prepre the entries for each of the date above. [10 Marks]

(c) Distinguish between ordinary share and preference shares [5 marks]