Reference no: EM132791388

BB (Pty) Ltd is a company in the Capricorn district. The company is in the business of manufacturing clothes. The company has a financial reporting period of 28 February. Currently the company is preparing the financial statements for the period ending 28 February 2019.
Below are independent scenarios which do not affect each other.

Scenario A

On 1 June 2018, BB (Pty) Ltd made two critical investment which are as follows;

Investment 1

• On 1 June 2018 BB (Pty) Ltd purchased 6 000 000 (60% interest) of the issued ordinary shares in Brexit (Pty) Ltd for R8 000 000. Brexit (Pty) Ltd on 1 February 2019 declared dividends amounting to R10 000 000 payable to the shareholders registered on this date. On the 18th of February 2019 Brexit paid out the dividend payable. There was no change in the issued share capital since 1 June 2018 in Brexit (Pty) Ltd.

Investment 2

• On 2 June 2018 BB acquired 15% interest in Chick Ltd for R2 500 000 excluding transaction costs as a long-term investment by purchasing 140 000 ordinary shares of the total issued shares in the company. On 15 January 2019 Chick Ltd declared an interim dividend of R15 per share to its registered shareholders as at this date. The dividend cash payment was done on 29 January 2019. As at 28 February 2019 the market value of Chick Ltd shares was R25.86 per share.

REQUIRED

Problem 1: Provide the journal entries to record the transactions above and show them separately.