Question

A company with paid in capital of $40,000 and retained earnings of $68.000 make legal reserve and decree 20% dividends , 10% capitalize and 70% make other reserve. After the posting is true that :

	A.	Other reserve equaled $ 47,600
	B.	Paid in capital equaled $46,800
	C.	Capitalization equaled $ 6,800
	D.	Dividends payable equal $12,240

Answer 1

FOLLOWING STATEMENT ARE TRUE AS DETAILED BELOW:-

A:- OTHER RESERVE EQUALED $ 47,600 IT IS 70 % OF RETAINED EARNING $ 68,000

B:- PAID IN CAPITAL EQUALED $46,800 (OPENING PAID IN CAPITAL IS $ 40,000 AND 10 % RETAINED EARNING $ 68,000 IS $ 6,800 IS ADDED TO THE OPENING PAID IN CAPITAL

C:-CAPITALIZATION EQUALED $ 6,800 (AS IT IS 10 % OF RETAINED EARNING $68,000

STATEMENT D IN FALSE AS DETAILED BELOW:-

D:-DIVIDENDS PAYABLE EQUAL $12,240. THIS STATEMENT IS FALSE AS DIVIDEND DECLARED 20% RETAINED EARNING $ 68,000 WHICH IS $ 13,600.