accounting putul only 495177

ADVANCED FINANCIAL ACCOUNTING 260 SHAREHOLDERS’ EQUITY QUIZ QUESTIONS What is a share? (1 mark) Answer Shares are issued with specific rights attached. Shares are then given different names to signify differences in right. The two most common forms of shares are ordinary shares and preference shares. Identify two advantages of a private placement of shares as compared with a public issue. (1 mark) Answer Speed, price, direction and prospectus 3. The shareholders of Quinninup Ltd hold 25 000 A class ordinary shares, fully paid at $4.50 each. On 17 April 2012, the company directors voted to make a 1 for 5 rights offer to these shareholders. The additional shares were offered at $1.75 each, payable in full one month after acceptance. The offer closed on 31 May 2012 with 90% of the shareholders accepting. Shares were duly allotted on that date and all monies were received when due. Required Prepare journal entries to record these events, show all workings. (2 marks) Answer 17 Apr 2012 Dr Cash Trust ($25,000/5 * 4.5) 22,500 Cr Application 22,500 (application monies received) 4. Forrest Ltd has issued 10 000 5% cumulative preference shares. Explain the meaning of the term “cumulative”. (1 mark) Answer Cumulative gets all dividends (previous + current) 5. The share capital of Murdoch Ltd consists of: 52 000 Ordinary A shares @ $2.50, fully paid $130 000 15 000 Ordinary B shares @ $1.50, paid to 80c 11 000 On 28 June 2012, the directors declared a 7c per share final dividend. Shareholder approval is not required to pay dividends. Required Prepare the journal entries to record the dividend, show all workings. (2 marks) Answer 28 June 2012 Dr Dividend declared Ordinary A ($52,000 * 0.07) 3,640 Dr Dividend declared Ordinary B ($11,000 * 0.07) 770 Cr Dividend payable 4,410 (declaration of final dividend of the year) Dr Dividend payable 4,410 Cr Cash 4,410 (payment of final dividend declared in previous…