Question:

Rocky Ltd. has in issue 8,000,000 ordinary shares and 1,200,000 preference shares at 31^st Dec 2015. The annual preference dividend is $1.20 per share. The financial statements as at 31^st Dec 2016 contained the following information:

$000

Preference share capital 3,600

Ordinary share capital 48,000

Retained Profits 29,300

The following equity transactions occurred in 2016:

5 February declared final dividends for 2015 for distribution on26 May: $0.60 for each preference share and $1 for each ordinary share outstanding on the same date.

10 April declared one bonus share for every four existing ordinary shares held.

12 May Issued 300,000 preference shares to acquire equipment which has a fair market value of $1,000,000

26 May Paid dividends that were declared on 5 February

20 August declared mid-year dividends of $0.60 per preference share and $1.50 per ordinary share

Required:

Prepare the journal entries (with narrations) to record the transactions

What I have so far:

5^th February, declaration date, final dividend of 2015 creation of liability on accounting record:

5 Feb 2016

Dividend - Preference shares Dividend Ordinary shares Dividend payable Declaration of final dividend of 2015 payable May 26th 2016

720,000 8,000,000

8,720,000

10 April, declaration of bonus shares, 1 for 4 existing ordinary shares:

10 Apr 2016

Retained Profits Paid-up capital Being issue of 2,000,000 fully paid bonus shares to existing ordinary shareholders out of retained profit

9,600,000

9,600,000

12 May, preference share issue:

12 May 2016

Equipment Paid-up capital Being issuance of 300,000 preference shares in exchange for equipment valued at $1,000,000

1,000,000

1,000,000

26^th May, payment of dividends declared 5^th Feb 2016

26 May 2016

Dividend Payable Cash at bank Being payment of dividends declared 5th Feb 2016

8,720,000

8,720,000

20^th August, Declaration date, mid-year dividend of 2016 creation of liability on accounting record:

20 Aug 2016

Dividend - Preference shares Dividend Ordinary shares Dividend payable Declaration of mid-year dividend

900,000 15,000,000

15,900,000

25^th October, payment of dividends declared 5^th August 2016

25 Oct 2016

Dividend Payable Cash at bank Being payment of mid-year dividends declared 20th Aug 2016

10,980,000

10,980,000

The companys retained profits at 31^st Dec 2016 are $29,300,000

Deducting $8,720,000 for the final 2015 dividend, transferring $9,600,000 to paid up capital for bonus share issue leaves $10,980,000 with which to pay $15,900,000 in mid-year dividends on Oct 2016

Have I made a mistake? Help! Im a bit lost!