Reference no: EM133170028
Question - The following section of shareholder's equity is extracted from the balance sheet as at 31 December 20X1, the year-end of Great Holdings Company ('GHC'):
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Shareholder's equity
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Preference shares, cumulative, non-participating: 125,000 shares issued, dividend $0.12 per share
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$375,000
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Preference shares, non-cumulative, participating: 75,000 shares issued, dividend $0.03 per share
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$150,000
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Ordinary shares: 600,000 shares issued
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$1,200,000
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Retained earnings
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$3,560,000
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Total shareholder's equity
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$5,285,000
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Additional information:
a) In 20X0, GHC declared and paid $10,000 of cash dividends.
b) The 75,000 shares of non-cumulative, participating preference shares were issued at 1 April 20X1.
c) At the year-end of 20X1, the board of directors of GHC declared a 1 for 8 bonus issue to ordinary shareholders at the original share price and $50,000 of cash dividends after that.
Required -
1) Show a journal entries to record the declaration of bonus issue and dividends at the year-end of 20X1. Explanations are not required.
2) Show a journal entries to record the payment of bonus issue and dividends for 20X1. Date and explanations are not required.
3) Calculate the dividend distributable to each type of share in 20X1.