Accounting Method II: Glacier Holdings Ltd Dividend Assignment

This assignment report analyzes the dividend of Glacier Holdings Ltd., a public company, focusing on its financial year ending June 30th. The report details the journal entries related to dividend declaration and payment, including entries for the final dividend, preference share dividend, and dividend payment to equity shareholders with the DRP option. It includes a working paper for the dividend calculation, illustrating how the 4% per share dividend was determined, and how the DRP option impacted the distribution of cash versus shares. Furthermore, the report provides a comprehensive list of ordinary shareholders, detailing the number of shares each holds after the dividend payment, considering the DRP option. The report concludes that accounting is the process of formulating different reports of business and journal entries are the basis of accounting as it is the first step which is taken to record the information of day to day transactions of the entity. The assignment also includes calculations related to the DRP option, showing how the number of shares held by shareholders changed after the dividend was issued.

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Preparation of the journal’s entries..............................................................................................1
List of ordinary shareholders and the number of shares they each hold after the payment of
final dividend...............................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Accounting can be defined as a technique which is used to record detailed information of
all the transactions that are made by an entity during a financial year. For all the companies it is
very important to make sure that they are able to formulate all the accounting records properly so
that their long-term goals such as engaging stakeholders in the business could be achieved. In
order to reach the goals, it is very important to formulate the reports properly so that all the
shareholders can determine that they will be able to get appropriate dividend or not (Bayer,
Bethke and Lambach, 2016). While planning to enhance the capital of the organisation it is
essential for the accounting professionals to render appropriate details of past years to the
potential shareholders so that the goals that are formed could be accomplished successfully.
Present report is based upon Glacier Holdings Ltd which is a public company and incorporated
many years ago. The company close its financial year on 30th June. This assignment covers
information of the dividend which is paid by the entity to its shareholders along with journal
entries of the same. Apart from this, list of ordinary shareholders and the number of shares that
thy hold after making the payment of dividend is also formulated in this report.
MAIN BODY
Preparation of the journal’s entries
Journal is a book which is formulated by organisations to record information of all the
transactions that are related to a specific accounting year. With the help of it, accuracy of
accounting records could be analysed as it helps to form ledger which is used to create trial
balance. If the balance of credit and debit side of TB is not matched then it is considered that
there is mistake in journal entries (Golubov, Lasfer and Vitkova, 2020). While planning to attract
more and more shareholders it is very important for all the organisations to make sure that they
are formulating journals properly. It will help to analyse actual financial position and the
outcomes of it in future. Glacier Holdings Ltd. is public company which is allowing dividend to
the shareholders on 15th of September. For this purpose, all the journals entries which were
formulated by the entity are as follows:
Journals entry for declaration of the final dividend:
Date Particulars DR. CR.
15th July Dividend paid a/c Dr. 4,80,000
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To DRP options share 2,08,164
To Dividend payable 2,71,836
(Being final dividend is declared by the
organisation of 4 percent per share which
is assessed on 15th June and declared on
15th July.)
Journal entry for payment of preference share dividend:
Date Particulars DR. CR.
31st August Preference share dividend a/c
Dr.
15,00,000
To Cash a/c 15,00,000
(Being payment of preference share
dividend is made to the shareholders.)
Journals entry for making payment of dividend to equity shareholders and issuing
the shares:
Date Particulars DR. CR.
15th September DRP option (Ordinary Shares) a/c Dr. 2,08,164
Dividend payable a/c Dr. 2,71,836
To Share capital (Ordinary share) a/c 2,08,164
To Cash a/c 2,71,836
(Being payment of the dividend is made
which was declared on 15th July. The
payment is made in cash and shares under
DRP option)
Working paper for the dividend:
The journal entries which was passed for the declaration and payment of the dividend
were passed according to the following calculation:
Dividend declared on 15th of July for the 4 percent per share on the shareholding so the
dividend will be:
= 1,20,00,000 * 4 / 100
= 480000
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The entity provided an option of DRP to all the shareholders and they can take shares
rather than cash as dividend. At 15th of July some of them selected this option and the shares for
the plan were 52,04,100. The dividend for the same shares which will be issues as nore shares
will be as follows:
= 52,04,100 * 4 / 100
= 2,08,164
As 52,04,100 shares were subject to the DRP option and the remaining 67,95,900 shares
were not subject to the same so the cash dividend which will be issued for the holders of these
shares will be as follows:
= 67,95,900 * 4 / 100
= 2,71,836
From the above calculations it has been determined that the cash dividend which will be
issued to the shareholders who have not adopted the DRP option will be 2,71,836 dollars. On the
other hand, all the share holders who have adopted the option of DRP will be issues dividend on
2,08,164 dollars in the form of cash (Huang and Sharif, 2017).
List of ordinary shareholders and the number of shares they each hold after the payment of final
dividend
Dividend is a type of return which is offered by the organisation to the shareholders so that
their involvement in the business could be increased. For all the business entities it is very
important to provide dividend to the shareholders because if they will not get any return on their
funds then it will leave negative impact upon their engagement. In order to keep them involved
in the business and maintain their interest. There are different types of dividends that are
provided by the enterprises (Jagannathan and Liu, 2019). It could be in the form on cash or
shares. Glacier Holding Ltd provided an option of DRP to all the shareholders in which they can
take shares rather than cash dividend.
It is very beneficial for the shareholders as by adopting this option they can increase their
capital in the entity and their power of decision making. It is totally up to the shareholders that
they want to select this option or not (Jagannathan, Liu and Zhang, 2019). The company will
only allocate shares to the shareholders who have agreed to the DRP option.
Family
name/Corporate
First
Name
DRP 1/7/20X1 DRP calculation
on final dividend
Roundin
g of
Share
balance
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name
[A]
[B] [C] [D] 20X0/X1 paid
15/9/X1
[E]
calculatio
n
[F]
15/9/X1
[G]
Johnson Pty Ltd… Yes 15,60,000 12,631.58 12,631 15,72,631
Williams… Ruthanne
…
Yes 25,000 202.43 202 25,202
Jones… Nadine… Yes 15,000 121.46 121 15,121
Davis… Jessie… Yes 12,500 101.21 101 12,601
Miller Trust
Fund…
Yes 4,38,000 3,546.56 3,546 4,41,546
Wilson… Gilma… Yes 1,11,000 898.79 898 1,11,898
Moore… Reiko… Yes 87,500 708.50 708 88,208
Anderson… Serafina… Yes 15,000 121.46 121 15,121
Thomas… Matt… Yes 24,500 198.38 198 24,698
Martin… Zoe… Yes 76,000 615.38 615 76,615
Thompson… Deane… Yes 58,900 476.92 476 59,376
Martinez… Gonzalo… Yes 32,200 260.73 260 32,460
Robinson… Art… Yes 19,900 161.13 161 20,061
Walker… Wendy… Yes 23,200 187.85 187 23,387
Allen… Romana… Yes 21,300 172.47 172 21,472
Young Ltd… Yes 7,50,000 6,072.87 6,072 7,56,072
King… Jeannette…Yes 5,000 40.49 40 5,040
Wright… Herta… Yes 54,500 441.30 441 54,941
Scott… Meri… Yes 29,800 241.30 241 30,041
Green… Sheldon… Yes 1,10,000 890.69 890 110,890
Baker… Forest… Yes 18,600 150.61 150 18,750
Nelson Waterloo
Pty Ltd…
Yes 10,00,000 8,097.17 8,097 10,08,097
Carter… Petrina… Yes 12,400 100.40 100 12,500
Perez… Eleonore… Yes 36,700 297.17 297 36,997
Turner… Craig… Yes 99,500 805.67 805 100,305
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Phillips… Nedra… Yes 28,800 233.20 233 29,033
Parker… Ignatius… Yes 3,45,000 2,793.52 2,793 3,47,793
Evans… Ken… Yes 65,000 526.32 526 65,526
Edwards… Cassandra
…
Yes 28,800 233.20 233 29,033
Collins… Janet…. Yes 1,00,000 809.72 809 1,00,809
Smith… Deeanna… No 30,000 30,000
Brown Ltd… No 3,22,000 3,22,000
Taylor… Nathaniel
…
No 1,76,000 1,76,000
Jackson
International
Fund…
No 32,50,000 32,50,000
White… Rueben… No 10,000 10,000
Harris… Shirley… No 33,500 33,500
Garcia Pty Ltd… No 9,78,000 9,78,000
Clark… Hermelinda
…
No 66,600 66,600
Rodriguez… Edward… No 48,000 48,000
Lewis… Kurt… No 9,400 9,400
Lee… Shanti… No 15,000 15,000
Hall… Evelia… No 9,000 9,000
Hernandez… Quinton… No 14,000 14,000
Lopez… Stephanie
…
No 45,400 45,400
Hill… Mavis… No 28,000 28,000
Adams… Samantha
…
No 25,000 25,000
Gonzalez… Garfield… No 9,200 9,200
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Mitchell… Penelope…No 59,000 59,000
Roberts… Yvette… No 67,800 67,800
Campbell
Superannuation
Ltd…
No 16,00,000 16,00,000
Total 12,000,000 42124 1,20,42,124
Total shares in
DRP
52,04,100 52,46,224
Total shares not
in DRP
67,95,900 67,95,900
Total 1,20,00,000 1,20,42,124
In order to analyse the total new shares that are issues by the entity along the capital
which is related to DRP and not related to DRP option the above table is generated. There are
seven different columns are generated for the purpose of calculations (Patel, Savani and Poriya,
2017). Column A is showing the family or corporate name of the shareholders, B is showing the
first name of them, C is for showing the shareholders who have selected and not DRP option. All
of them who have selected DRP there is YES in their rows under this column and who have not
selected DRP there is NO in their Rows for this column.
D column is reflecting their capital as on 1st July. Column E is for showing the DRP
calculation for the final dividend and the column F is showing the round off balance for the
same. The figures are rounded off because shares were required to be issued. The last column
which G is showing the closing balance of shares as on 15th September. From the above
calculations it has been analysed that 42,124 shares will be issues as the part of DRP option and
the total shares in DRP will be 52,46,224. Total shares which will not be the part of the DRP
option their number is 67,95,900. When the organisation will issue the dividend shares then it
will increase the total shares up to 1,20,42,124 (Tiwari and Pal, 2020).
Working paper for the issue of dividend:
Glacier Holdings Ltd planned to offer share dividend rather than cash dividend under the
DRP plan. All the shareholders who will select this option their capital will be increased within
the entity. The total increment in the holdings will be in calculated as follows:
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= Shareholding * 0.04 / (5.20 * 095)
In the above formula 0.04 is the dividend rate, 5.20 is the share price as on 15th July, 0.95
is the share issues at 95% of the share price. It is calculated as follows:
= 5.20 * 0.95
= 4.94
The total increment in the holdings will be added to the existing capital of the
shareholders (Ying and Bowen, 2017). After implementation of it the aggregated capital for the
shareholders will be as follows:
Total number of shares of shareholders who have selected DRP = 52,46,224
Total number of shares of shareholders who have not selected the DRP option =
67,95,900
Total shares at 15th September = 1,20,42,124
CONCLUSION
From the above project report, it has been concluded that accounting is the process of
formulating different reports of business. Main purpose of creating them is to keep detailed
information of all the transactions which have taken place during the accounting year. Journal
entries are considered as the basis of accounting as it is the first step which is taken to record the
information of day to day transactions of the entity. All the organisations allow dividend to the
shareholders on their capital. Sometime companies provide them option of taking cash or shares
as the dividend. It is beneficial for the enterprise as well as the shareholders. With the help of it,
entity can save monetary resources to meet the future obligations apart from the holders can
increase their holding with the entity. It will help them to enhance their power of decision
making for the organisation.
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REFERENCES
Books and Journals:
Bayer, M., Bethke, F. S. and Lambach, D., 2016. The democratic dividend of nonviolent
resistance. Journal of Peace Research. 53(6). pp.758-771.
Golubov, A., Lasfer, M. and Vitkova, V., 2020. Active catering to dividend clienteles: Evidence
from takeovers. Journal of Financial Economics.
Huang, Y. and Sharif, N., 2017. From ‘labour dividend’to ‘robot dividend’: Technological
change and workers’ power in South China. Agrarian South: Journal of Political
Economy. 6(1). pp.53-78.
Jagannathan, R. and Liu, B., 2019. Dividend dynamics, learning, and expected stock index
returns. The Journal of Finance. 74(1). pp.401-448.
Jagannathan, R., Liu, B. and Zhang, J., 2019. Corrigendum for Dividend Dynamics, Learning,
and Expected Stock Index Returns (The Journal of Finance,(2019). 74. 1,(401-448),
10.1111/jofi. 12731). Journal of Finance. 74(4). pp.2107-2116.
Patel, P., Savani, J. and Poriya, N., 2017. Semi-Strong Form of Market Efficiency for Dividend
and Bonus Announcements: An Empirical Study of India Stock Markets. ANVESHAK-
International Journal of Management. 6(1). pp.108-121.
Tiwari, S. and Pal, D., 2020. DIVIDEND POLICY DECISIONS AND SHARE PRICES
RELATIONSHIP. Finance & Accounting Research Journal. 2(2). pp.76-81.
Ying, W. and Bowen, D., 2017. The Aging Population and the Second Population Dividend:
Empirical Evidence from 18 Aging Nations. Finance & Economics. (8). p.7.
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