Chp 14: Equities (2)

Question 1

Prepare journal entries when business issue shares.

Answer 1

Question 2

Journal entry for the transfer of LOSS at end of financial period in a private limited company

Answer 2

Question 3

Journal entry to close off DIVIDENDS account at the end of financial period

Answer 3

Question 4

How do we determine Shareholders’ equity ?

Answer 4

Shareholders’ equity

= Share capital + Retained earnings

Question 5

Identify 2 reasons for the INCREASE in shareholders’ equity for the year

Answer 5

Business made profit for the year….

Business issued additional share of xx shares @ $x each…

Question 6

Identify 2 reasons for the DECREASE in shareholders’ equity for the year

Answer 6

Business made a LOSS for the year……

Business declared DIVIDENDS of $x per share……

Question 7

Describe transaction on 30 June.

Answer 7

On 30 June, business issued additional shares and received cash in its business bank account for $200 000.

Question 8

Describe the transactions on 31 Dec

Answer 8

On 31 December 2021, the business made a profit of $X and the total dividends of $x declared during the year was transferred to the retained earning account