Problem 28

DATE PARTICULARS Debit Credit

2015 Dividends (Retained Earnings)
Paid in capital Excess of Par 400,000
Dividends Payables 400,000
To record Dividend Declaration

Dividends Payables 400,000

Cash 400,000
To record Dividend Declaration

2016 Dividends (Retained Earnings) 100,000

Paid in capital Excess of Par 300,000
Dividends Payables 400,000
To record Dividend Declaration

Dividends Payables 400,000

Cash 400,000
To record Dividend Declaration

2017 Dividends (Retained Earnings) 150,000

Paid in capital Excess of Par 250,000
Dividends Payables 400,000
To record Dividend Declaration

Dividends Payables 400,000

Cash 400,000
To record Dividend Payment

2018 Dividends (Retained Earnings) 200,000

Paid in capital Excess of Par 200,000
Dividends Payables 400,000
To record Dividend Declaration

Dividends Payables 400,000

Cash 400,000
To record Dividend Payment

2019 Dividends (Retained Earnings) 250,000

Paid in capital Excess of Par 150,000
Dividends Payables 400,000
To record Dividend Declaration

Dividends Payables 400,000

Cash 400,000
To record Dividend Payment
Problem 29
1. Dividend income in 2020 22,000

2. Journal Entry
Date Particulars Debit Credit
September 1, 2020 no entry

October 30, 2020 Cash

Dividend Income 22,000
To record receipt of income 22,000

Problem 30
1.
Journal
Date Particulars Debit Credit
Investment in ABC
Jan-01 company 1,050,000
Bank 1,050,000
Being shares of ABC company purchased

Investment in DEF
01-May company 660,000
\Bank 660,000
Being shares of DEF company purchased

Ban
01-Apr k 90,000
Dividend Income 90,000
Being dividend received from ABC company

Investment in DEF
01-Jul company
Dividend Income
Being shares of DEF company received as a part of
dividend 660,000
660,000
Investment in GHI
01-Aug company 750,000
Bank 750,000
Being shares of GHI company purchased

Ban
01-Oct k 90,000
Dividend Income 90,000
Being dividend received from ABC company
 Investment in DEF
15-Nov company 40,000
 Bank 40,000
Being right issue exercised of DEF company

Ban
01-Dec k 350,000
Loss on sale of share 405,000
Investment in DEF company 755,000
Being 10000 shares of DEF company sold

2. Carrying Value
-Long term Investments are carried over at cost price i.e. the cost of acquisition of the investment.
-ABC Company shares will be valued at P70/share i.e.
P1,050,000
-DEF company shares will be valued at P0/share for 6000 shares received as
dividend and P25/share for right issue share i.e. P40,000
-GHI Company shares will be valued at P75/share i.e.
P750,000.

Problem 31
DATE PARTICULARS Debit Credit
Feb-28 No journal entry is made for stock split
because the total dollar
value of the shares remains same

Apr-31 Dividend receivable 12,000

Stock dividend income 12000

Jun-30 Cash 99,000

Brokerage expenses 1,000
Loss on sale 25,000
Investment in JKL company 125,000

Jul-31 Cash 675,000

Gain on sale 175,000
 Investment in ABC corporation 500,000

Sep-30 Journal entry will be made

when rights are exercised
 Dec-31 Investment in ABC corporation 2,500,000
Share premium 1,000,000
Equity share capital - ABC corporation 3,500,000

2. Carrying value of the investment

PARTICULAR
Beginning balance 1,650,000
add: Stock dividend 12,000
Right issue acquired in ABC corporation 3,500,000 3,512,000
Total 5,162,000
Less: Sales of JKL stock 125,000
Sales of ABC stock 500,000 625,000
Carrying value of investment 4,537,000