Ignore VAT Assume a dividends tax rate of 20% You have been provided with an ext
ID: 2438434 • Letter: I
Question
Ignore VAT Assume a dividends tax rate of 20% You have been provided with an extract of the financial statements of Elephant Ltd and are required to answer certain questions Elephant Ltd: Extract of the statement of financial position as at 31 December 2017 2017 2016 Equity Share capital: Class A Share capital: Class B Retained earnings 35 000 000 500 000 67 000 000 ?102 500 000 740 000 104 000 000 Liabilities Long-term loan (15%) Trade payables Bank overdraft 90 000 000 450 000 4 000 90 454 000 21 000 000 800 000 12 000 21 812 000 16Explanation / Answer
1.
No. of shares of class B as on 1.1.17= 500,000/5= 100,000 shares
Share Capital: Class B at the end of 12.31.2017= 740,000
No. of class B shares issued during the year= 40,000 shares [740,000=500,000+x*6]
2.
Journal Entries- Issue of Class A shares
-> Bank A/C Dr. 30,160,000
To Share Application for Class A shares 30,160,000
-> Share Application and Allotment A/C Dr. 30,160,000
To Share Capital A/C 23,200,000
To Bank A/C 6,960,000
-> Share Issue Cost A/C Dr. 1,140,000
To Bank A/C 1,140,000
3.
30.06.2017 General Reserve/P&L A/C (Class B shares) Dr. 50,000
To Proposed Dividend 50,000
31.12.2017 General Reserve/P&L A/C (Class B shares) Dr. 74,000
To Proposed Dividend 74,000
31.12.2017 General Reserve/P&L A/C (Class A shares) Dr. 3,000,000
To Proposed Dividend A/C 3,000,000