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Bowling Ltd is a subsidiary of Pinhead Ltd for the year ending 2009
Bowling Ltd is a subsidiary of Pinhead Ltd for the year ending 2009. The following are the balances recorded in Charis books for the year 2009:
|
$ |
|
|
Ordinary Shares |
100,000 |
|
Preference shares 8% |
50,000 |
|
Debentures 10% |
30,000 |
The investments of Pinhead Ltd in Bowling Ltd are summarized as followed:
|
% |
|
|
Ordinary Shares |
60% |
|
Preference shares |
40% |
|
Debentures |
20% |
Bowling Ltd has declared 10,000$ dividend for its ordinary shares and the respective yearly dividend and interest for preference shares and debentures. Bowling Ltd has not accrued for the dividends and interest declared.
Determine the accruals/
- Increase dividend payable by 14,000$ and increase interest payable by 3,000$ in Pinhead Ltd
- Increase dividend payable by 14,000$ and increase interest payable by 3,000$ in Bowling Ltd
- Increase dividend payable by 13,000$ and increase interest payable by 4,000$ in Pinhead Ltd
- Increase dividend payable by 13,000$ and increase interest payable by 4,000$ in Bowling Ltd
Expert Solution
Answer : Correct option is Increase dividend payable by 14,000$ and increase interest payable by 3,000$ in Pinhead Ltd
Reason :
Calculation of Interest Accrual
Interest Accrual for the year = 30000 * 10% = 3000
Dividend Accrual = (50000 * 8%) + 10000 = 14000
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