Accounting for Investments and Profits
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ScribdTranslationsAccounting for Investments and Profits
Translated by
ScribdTranslationsCARIBBEAN UNIVERSITY (UNICARIBE)
THE INVESTMENTS ACCOUNTING III
Professor Juan Cancio Pérez (M.A)
PRACTICAL CASES
On April 30, 2018, the company El Estudiante, SRL began its operations with 100,000.
shares with a nominal value of R$100.00 each, whose share capital is composed as follows:
Julio Ruíz 40,000 shares in Cash, Ramón Camacho 35,000 shares Building and José Ortíz
25,000 shares in Merchandise. This year, profits of RD$1,280,000.00 were obtained, of which the
75% was distributed as cash dividends, through a check from Banco BHD and the remainder (25%)
It was distributed as capitalization among the shareholders.
It is requested: a) Share Capital Register. b) Recording of the profits. c) Registration of
the distribution of profits in cash and capitalization.
100,000.00 X 100.00 = 10,000.00 00 Equity Capital
Distribution Participación
40,000.00 X 100.00 = 4,000,000.00 /10,000,000.00 = 40% Julio Ruiz
35,000.00 X 100.00 = 3,500,000.00 /10,000,000.00 = 35% Ramón Camacho
25,000.00 X 100.00 = 2,500,000.00 /10,000,000.00 = 25% José Ortíz
Date Detail Auxiliary Debit Credit
30/04/2018 Cash in Hand and Banks 4,000,000.00
General Box 4,000.00.00
Property, Plant and Equipment 3,500,000.00
Building 3,500,000.00
Inventory 2,500,000.00
@
Capital 10,000,000.00
Julio Ruiz 4,000,000.00
Ramón Camacho 3,500,000.00
Jose Ortiz 2,500,000.00
Record of the profits.
Date Detail Auxiliary Debit Credit
30/04/2018 Summary of Earnings and 1,280,000.00
Losses
@
Utilities of the Period 1,280,000.00
Distribution
Utility Effective Capitalization
1,280,000.00 X 40% = 512,000.00 X 75% = 384,000.00 X 25% = 128,000.00 Julio R.
1,280,000.00 X 35% = 448,000.00 X 75% = 336,000.00 X 25% = 112,000.00 Ramón C.
1,280,000.00 X 25% = 320,000.00 X 75% = 240,000.00 X 25% = 80,000.00 José O.
1,280,000.00 960,000.00 320,000.00
Recording of the distribution of profits in capitalization
Date Detail Assistant Debit Credit
Period Earnings 320,000.00
@
Capital 320,000.00
Julio Ruiz 128,000.00
Ramón Camacho 112,000.00
José Ortiz 80,000.00
Cash ISR Cash to be Paid
384,000.00 X 27% = 103,680.00 280,320.00 Julio Ruíz
336,000.00 X 27% = 90,720.00 245,280.00 Ramón Camacho
240,000.00 X 27% = 64,800.00 175,200.00 José Ortíz
960,000.00 259,200.00 700,800.00
Record of the distribution of cash profits
Julio Ruíz
Date Detail Auxiliary Debit Credit
30/04/2018 Period Profit 384,000.00
@
Cash in Hand and Banks 280,320.00
BHD Bank 280,320.00
Withholdings Payable 103,680.00
Income Tax 103,680.00
Ramón Camacho
Date Detail Helper Debit Credit
30/04/2018 Period Profit 336,000.00
@
Cash in Hand and Banks 245,280.00
BHD Bank 245,280.00
Withholdings Payable 90,720.00
Income Tax 90,720.00
José Ortiz
Date Detail Auxiliary Debit Credit
30/04/2018 Period Profit 240,000.00
@
Cash in Hand and Banks 175,200.00
BHD Bank 175,200.00
Withholdings Payable 64,800.00
Income Tax 64,800.00
On 31/08/2019, the company La Milagrosa, S. A. made an investment in the company Multielectricos.
SRL, for the amount of RD$ 2,500,000.00 in common shares at a rate of RD$ 1,000.00 for each
action, with the market value of RD 900.00 per share, check from Banco Popular.
Actions Value x Action Investment Actions Market Value Investment
2,500 X 1,000 = 2,500,000.00 2,500 X 900 = 2,250,000.00
2,500,000.00 - 2,250.000 = 250,000.00 Prima
Fecha Detalle Auxiliary Debit Credit
31/08/2019 Inversión en Acciones 2,250,000.00
Multielectricos, LLC 2,250,000.00
First 250,000.00
@
Cash in Hand and Banks 2,500,000.00
Popular Bank 2,500,000.00
Cancellation of the Investment
Date Detail Auxiliary Debit Credit
Cash in Hand and Banks 2,250,000.00
BHD Bank 2,250,000.00
@
Investment 2,250,000.00
Multielectricos, LLC 2,250,000.00
On 31/08/2019, the company La Milagrosa, S.A. made an investment in the company Los Molinos.
EIRL, for the amount of RD$ 2,500,000.00 in preferred shares at a rate of RD$ 1,000.00 each
action, with the market value of RD1,200.00 per share, check from Banco BHD.
Actions Value x Action Investment Actions Market Value Investment
2,500 X 1,000 = 2,500,000.00 2,500 X 1,200 3,000,000.00
3,000,000.00 - 2,500.00 = 500,000.00 Discount
Fecha Detalle Auxiliary Debit Credit
31/08/2019 Inversión en Acciones 3,000,000.00
Los Molinos, EIRL 3,000,000.00
@
Cash in Hand and Banks 2,500,000.00
BHD Bank 2,500,000.00
Discount 500,000.00
On 31/08/2019, the company La Milagrosa, S. A. made an investment in Banco Popular worth
from RD$ 6,000,000.00, at an interest rate of 15% per year, payable every 90 days and maturing at
5 years. Check from Banco BHD
I=CXTXT
UT (100)
I = 6,000,000.00 X 15 X 90 = 8,100,000,000.00I= 225,000.00
360 X 100 36,000
Date Detail Assistant Debit Credit
31/08/2019 Inversión 6,000,000.00
Popular Bank 6,000,000.00
Accounts Receivable Interest 225,000.00
Popular Bank 225,000.00
@
Cash in Hand and Banks 6,000,000.00
BHD Bank 6,000,000.00
Loan Cancellation
Date Detail Auxiliary Debit Credit
08/31/2022 Loan Payable 6,000,000.00
Popular Bank 6,000,000.00
@
Cash in Hand and Banks 6,000,000.00
BHD Bank 6,000,000.00
31/08/2019 The company La Milagrosa, S. A. made an investment in Banco BHD worth
RD$ 2,700,000.00, at an interest rate of 18% per year, payable quarterly with
maturity in 3 years.
I=CXTXT
UT (100)
I = 2,700,000.00 X 18 X 4 = 194,400,000.00I= 162,000.00
12 X 100 1,200
Investment and Interest Registration
Date Detail Auxiliary Debit Credit
31/08/2019 Investment 2,700,000.00
BHD Bank 2,700,000.00
Accounts Receivable 162,000.00
BHD Bank 162,000.00
@
Cash in Hand and Banks 2,700,000.00
BHD Bank 2,700,000.00
Earned Interest 162,000.00
Investment Cancellation
Fecha Detalle Auxiliary Debit Credit
31/08/2022 Cash in Hand and Banks 2,700,000.00
BHD Bank 2,700,000.00
@
Investment 2,700,000.00
BHD Bank 2,700,000.00