Reference no: EM133122026

Question - Dinar Harvest Bhd (DHB) ventures in property development in Malaysia. DHB provides the following information on 1 January 2021:

RM

300,000 Ordinary Share Outstanding 1,275,000

50,000 9% Preference Shares 1,000,000

Retained Earnings 1,113,500

Dividend Distributable 315,000

Dividend Payable 127,500

The following are transactions related to DHB's equity throughout the year 2021:

1. Paid in full the amount of cash dividend declared.

2. Issued 75,000 ordinary shares declared as share dividend in the previous year.

3. Issued 120,000 ordinary shares at a market price of RM4.15 per share. The cost related to the issuance were professional fees RM3,700 and stamp duties RM50.

4. Declared cash dividend for the year 2021. The cash dividend for ordinary shares was RM0.85 per share, payable in February 2022.

The reported net profit for the year was RM888,990.

Required -

(a) Prepare necessary journal entries to record the above transactions.

(b) Prepare the Statement of Financial Position as at 31 December 2021, showing only the equity section.

(c) If the company decides to declare a share dividend instead of cash, explain the effects on the company's asset, liability and equity.