"Shadow Ruler Ltd has two transactions related to equity that are yet to be recorded:
(a) On 8 June 2022, Shadow Ruler Ltd sells 7,500 shares to investors for $4.25 per share. The investors paid in cash. These shares were previously acquired from investors by the company at $3.60 per share. Note that a company is permitted to hold a small proportion of its own shares as treasury stock.
(b) On 23 June 2022, Shadow Ruler Ltd pays a dividend to investors that had previously been declared. It is paid as $0.25 cash per share and one bonus share for every six (6) shares held. Prior to issuing the bonus shares, the company had 270,000 shares on issue. The bonus shares are valued at $4.50 per share.
Required:
Prepare journal entries for sale of treasury stock and payment of the dividend.
Use the answer template below
Shadow Ruler Ltd’s General Journal:
Date
Account Names
Debit
Credit
8/6/2022
(To record sale of treasury stock to investors)
23/6/2022
(To record dividend paid in cash and shares)
"
