Assignment Problem: The following transactions took place during the period ending 30 June 2016 for McKay Ltd:
Transfer $15,000 from general reserve to retained profits.
Profit for the period was $780,000.
Land was revalued upwards during the year by $45,000 for the year.
Bonus share issue from Revaluation Reserve of $50,000.
Share issue received funds of $120,000 from investors and all shares applied for where allotted during the period.
A bank loan of $34,000 was paid off with cash.
Dividends declared and paid with cash during the period totalled $160,000.
Additional information:
Beginning balance of shareholder's equity (1 July 2015) was $165,000.
Assume there were no other transactions during the period than those mentioned above.
Required:
Question 1: Calculate the ending balance of shareholders' equity using the information above.
Question 2: Prepare the T-accounts for Retained Profits, Share Capital, General Reserve and Revaluation Reserve for McKay Ltd at 30 June 2016. The following balance are provided as at 1 July 2015:
Retained Profits $40,000
Share Capital 49,000
Revaluation Reserve 56,000
General Reserve 20,000
Total Shareholder's Equity $165,000
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