A
Give the general journal entry to record provisional tax paid of $12,000.
Dr Provisional Tax 12,000. Cr Bank 12,000
Give the entry required to close off the final dividends account of $230,000.
Dr Retained earnings 230,000. Cr Final dividend 230,000
What test must be met by a company before a dividend is paid and when does it apply?
Solvency Test
Give the journal entry to close off income summary for a company which made a loss of $22,000.
Dr Retained earnings 22,000. Cr Income summary 22,000
Where in the financial statements would you find details of interest paid?
Finance Costs note in the Notes to the Income Statement
Give the journal entry to revalue the financial asset “Shares in Telecom” from their cost of $18,000 to market value of $15,000.
Dr Decrease in fair value of financial assets
Cr Shares in Telecom
What is the term for profits made by a company which have not been distributed to shareholders?
Retained Earnings
Give 2 situations in which the Solvency Test is applied.
Dividend payout, share repurchase
What is an interim dividend?
A pay-out to shareholders - normally after the 6 monthly results have been announced.
Give the general journal entry to record taxation expense of $34,000
Dr Taxation Expense 34,000Cr Tax Payable 34,000
What does an inventory note normally say about the valuation of inventory?
Inventory is valued at the lower of cost and net realisable value.
Why is final dividend for the year a note only?
It is announced after year end (when profit is known) so is not a “present obligation” at balance date.
Name three details shown in a final dividend note.
Date declared, date to be paid, amount to be paid.
Why does a company pay tax on its profits?
Separate legal entity
When is a “Statement of Comprehensive Income” prepared?
When there are revaluations of land and/or buildings.
Close off the interim dividend account which has a balance of $120,000.
Dr Retained Earnings 120,000. Cr Interim dividend 120,000
Give the general journal entry to close off provisional tax paid of $9,000.
Dr Taxation Payable 9,000. Cr Provisional Tax 9,000
Give the journal entry to close off the $5,000 “Increase in financial assets” account.
Dr Increase in financial assets Cr Income summary
Give the journal entry to close off tax expense.
Income Summary
Give the general journal entry to close off taxation expense of $18,000.
Dr Income Summary 18,000 Cr Taxation Expense 18,000
Give the entry to repurchase 20,000 shares at a fair value of $3.80 if contributed equity has a balance of $600,000 (300,000 shares).
Dr Contributed equity 40,000 Dr Retained earnings 36,000 Cr Bank 76,000
Name three equity accounts which may appear in a company’s Statement of Financial Position.
3 of: Contributed equity, retained earnings, land revaluation surplus, building revaluation surplus
Give the balance in the Taxation Payable account if the taxation expense for the year is $45,000 and provisional tax paid totals $27,000 .
Answer: $18,000 liability
Give the journal entry to record the funds received by a company which uses a sharebroker (charging 5% brokerage) to raise capital of $450,000 by selling shares to the public.
Answer: Dr Bank 427,500 Cr Contributed equity 427,500
Give the entry updating the building revaluation surplus if buildings are to be revalued to $420,000. Balances in the trial balance are: Buildings $360,000, Accumulated depreciation buildings $80,000
Answer: Dr Buildings 140,000 Cr Buildings revaluation surplus 140,000