Question
The below transactions are for Murrurundi Ltd. 1. Profit for the year was $1750000. Ignore income tax. 2. Directors resolved to transfer the amounts specified
The below transactions are for Murrurundi Ltd. 1. Profit for the year was $1750000. Ignore income tax. 2. Directors resolved to transfer the amounts specified below from retained earnings to:
contingencies reserve, $1000000
general reserve, $400000. 3. Some years ago, the company had established an exchange fluctuation reserve, $4500000, but now that it had withdrawn from international trade, this reserve was no longer required. 4. Startup costs of $250000 were to be written off. This has not been reflected in the profit in (1) above. 5. An interim dividend of $200000 had been paid and directors recommended a final dividend of $300000 to be paid in 3 months' time, after ratification by shareholders at the annual general meeting. Both dividends were paid out of retained earnings. Note: The beginning balance of the Retained Earnings account was $1800000. Required (a) Show the journal entries to record 1 to 5 above. (b) Prepare the statement of changes in equity for Murrurundi Ltd.
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