In year 2021, the following transactions affected Blessing Home Corporation’s shareholders’ equity accounts.

Mar. 4	The Board of directors declared a stock split that reduced the par value of ordinary shares from $100 to $20 per share. This action increased the number of outstanding shares to 500,000.
Mar. 26	Declared a cash dividend of $1.75 per share on the outstanding shares of ordinary shares.
Apr. 5	Paid the cash dividends declared on March 26.
Nov. 1	Declared a 5% bonus issue (the fair market value of the share to be issued is $25 per share, the par value is $20 per share).
Dec. 1	Issued the bonus shares declared on November 1.

Required:

1. Journalize these transactions for 2021.

2. On March 25, the Board of directors discussed the dividend scheme. Some of the directors agreed to pay cash dividends, others agreed a bonus issue. Please (a) list two conditions for paying cash dividends, and (b) compare the different impacts of cash dividends and bonus issue on assets and equity.

3. Scott Pratts, an owner of Blessing Home, has 1,500 shares before the bonus issue. Compute the proportionate ownership of Scott Pratts after the bonus issue.

Answer rating: 100% (QA)

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