Bramble Limited issued 105,000 £18 par value, cumulative, 8% preference shares o

ID: 2533939 • Letter: B

Question

Bramble Limited issued 105,000 £18 par value, cumulative, 8% preference shares on January 1, 2015, for £2,584,800. In December 2017, Bramble declared its first dividend of E813,100 (a) Prepare Bramble's journal entry to record the issuance of the preference shares. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (b) If the preference shares are not cumulative, how much of the £813,100 would be paid to ordinary shareholders? Ordinary Shares Dividends (c) If the preference shares are cumulative, how much of the E813,100 would be paid to ordinary shareholders? Ordinary Shares Dividends

Explanation / Answer

Account titles and explanation

Debit

Credit

Cash A/c

2584800

To 8% Preference Share Capital

1890000

To Premium on issue of Pref share

694800

(b) If pref shares are non cumulative, Dividend paid to ordinary sh holders:-

Dividend to pref sh holder = 1890000*8% = 151200

Total dividend = 813100

Dividend to ordinary sh holders = (813100-151200) = 661900

(b) If pref shares are cumulative, Dividend paid to ordinary sh holders:-

Dividend to pref sh holder =( 1890000*8%) * 3 yrs = 453600