Gilbert Company was created in early X1. Its original capital was 2,500 shares with a par value

Question:

Gilbert Company was created in early X1. Its original capital was 2,500 shares with a of 100 CU. The composition of the capital as of 31 December X9, is described in article 7 of the amended by-laws (see exhibit). At the end of X9 the shareholders€™ equity account before appropriation stands as shown in the table below.

The board of directors has approved a motion in which, in addition to the appropriation of the earnings from X9, there will be a second dividend, which will be paid to shares of all classes. This second dividend will be the maximum legally possible without, however, exceeding ten CU per share. The remaining balance, if there is any, will be transferred to the retained earnings account. The prime rate mentioned in the by-laws and applicable to the year X9 is 6 percent per annum. As soon as the amount of the legal reserve represents ten percent of the share capital, there is no longer a need to fund this reserve.
Required
1. Prepare a suggested appropriation of the X9 net income.
2. Prepare the appropriate accounting entries that your suggested appropriation requires.
3. Prepare a table describing the shareholders€™ equity after appropriation.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...