4E_ Biz Entities (Company)

Ethan Legal Services issued $120 000 shares at $1.50 each. All shares were sold and fully paid.

Calculate the total share capital.

• $18 000

• $180 000

• $1.50

• $120 000

In a private limited company, _________________________

can contribute cash to the business through buying shares and receiving a portion of the profits made by the business whenever it declares dividends.

Shareholders' equity for a private limited company increased from last year. Which of the following are possible reason(s) for the change.

• Business made a profit for the year

• Business made a loss for the year

• Dividends declared during the year

• Issuance of shares during the year

On 1 January 2020, Queen Sipa Pte Ltd issued 20 000 shares for $2.00 each and all shares were issued and fully paid. Which of the following shows the double entry to record the transaction on 1 January 2020?

• Dr Dividends $20 000

  Cr Cash at Bank $20 000

• Dr Dividends $40 000

  Cr Cash at Bank $40 000

• Dr Dividends $4 000

  Cr Cash at Bank $ 4 000

• Dr Dividends $40 000

  Cr Dividends payable $40 000

Which of the following statement about dividends is true?

• Dividends is a distribution of a portion of profits from the company to the shareholders.

• Dividends increases retained earnings.

• Dividends are business expenses.

• Dividends are recorded only when they are paid.

Which of the following double entries may be used to close the income summary account for a private limited company at the end of the year?

(You may select more than one answer.)

• Dr Income summary

  Cr Capital

• Dr Capital

  Cr Income summary

• Dr Income summary

  Cr Retained earnings

• Dr Retained earnings

  Cr Income summary

Which of the following is the journal entry to record dividends declared but not paid out?

• Dr Dividends

  Cr Dividends payable

• Dr Dividends payable

  Cr Dividends

• Dr Retained earnings

  Cr Dividends

• Dr Dividends

  Cr Cash at bank