Theory
What accounting theory requires drawings to be recorded?
Accounting entity theory.
Describe the particulars written in a drawings account.
CAB/MV/Equipment -> Capital
State the double-entry when an owner contributes a van into the business.
Dr Motor vehicle
Cr Capital
A company has 500,000 ordinary shares. A dividend of $0.06 per share was declared. What is the total dividend amount distributed by the company?
$30,000.
Define accounting entity theory.
Accounting entity theory states that the owner of the business is separate from the business. Only business transactions affecting the business are recorded. Personal transactions of the owner are not recorded.
Describe the particulars written in a capital account.
Balance b/d -> CAB/MV/Equipment -> Drawings -> Profit and loss -> Balance b/d
State the double entry when owner takes inventory for his son's birthday party.
Dr Drawings
Cr Inventory
The balance in the retained earnings account of a company on 1 Jan 2015 was $61,780. The profit for the year was $13,240 and dividends declared and paid was $4,320. What was the balance in the retained earnings account on 31 Dec 2015?
$70,700
Profit for the year in a company is transferred to which account?
Retained earnings
Describe the particulars written in a issued share capital account.
Balance b/d -> CAB -> Balance b/d
State the double entry when dividends are declared.
Dr Dividends
Cr Dividends payable
Describe the particulars written in a retained earnings account.
Balance b/d -> Dividends -> Profit and loss -> Balance b/d
On 1 April 2010, Thames Ltd has a balance of $100,000 in the issued share capital account and a balance of $25,000 in the retained earnings account. On 1 Jan 2011, a further 20,000 ordinary shares at $0.50 per share were issued and paid up. State the double entry to record the issue of shares.
Dr Cash at bank $4,000
Cr Issued share capital $4,000