Problem
Dividends and share issues
The share capital of Kathmandu Ltd as at 1 July 2016 comprised 1400000 ordinary shares issued and paid to $3.00 less share issue costs of $41000.
Information about some events/transactions relating to Kathmandu Ltd is below:
• On 21 August 2016, a dividend of $440000 was paid in cash. This dividend had been determined (proposed) on 29 June 2016 from retained earnings.
• On 1 October 2016, Kathmandu Ltd issued a prospectus calling for applications for 1600000 ordinary shares from the public at an issue price of $4.20, payable $2.50 on application and $1.70 on allotment. By 25 November 2016, it had received 1800000 applications with $2.50 paid. On 1 December 2016 the company issued the shares and made refunds to 200000 applicants. Costs incurred in the share issue totalled $52000. All allotment monies were received by 24 December 2016.
• On 28 June 2017, the directors determined a final dividend of $0.18 per share from retained earnings. This is to be paid on 20 August 2017 following the annual general meeting.
At 30 June 2017, the directors transferred $350000 to retained earnings from the general reserve.
Task
1. Prepare the general journal entries required in the year ended 30 June 2017 to reflect the events/transactions above.
2. How would your entries above change if the final dividends had not been determined (at 29 June 2016 and 28 June 2017), but had been declared at these dates?