Markvu3112
Aug 21, 2014, 07:47 AM
Calls on shares, forfeiture, issue and exercise of options, redemption of preference shares.
Cajun Ltd’s equity at 30 June 2013 was as follows:
400,000 ordinary shares, issued at $1.60, fully paid
$
640,000
450,000 ordinary shares, issued at $2, called to $1.10
495,000
170,000 redeemable preference shares, issued at $1, fully paid
170,000
Calls in advance (10,000 ordinary shares)
7,000
Share issue costs
(7,000)
General reserve
60,000
Retained earnings
310,000
The following events occurred during the year ended 30 June 2014:
2013
July
15
The final call, due 31 August, was made on the partly paid shares.
Aug.
31
All call money was received, except for that due on 23,000 shares.
Sept
10
In accordance with the constitution, the shares on which the call was unpaid were forfeited. The company is entitled to keep any balance from forfeiture of shares.
Oct.
1
The company offered ordinary shareholders 1 option (at a price of 90 cents per option) for every 5 shares held. Each option entitled the holder to buy 1 ordinary share at a price of $1.50 per share, exercisable on or before 15 April 2014.
31
65,000 options were taken up by shareholders, for which all money due was received.
2014
Jan.
3
A prospectus was issued, inviting applications for 90,000 ordinary shares at an issue price of $2, payable in full on application. The purpose of the issue was to fund the redemption of the preference shares. The issue was underwritten at a commission of $5,900.
31
The issue closed fully subscribed, with all money due having been received.
Feb.
5
The 90,000 shares were allotted, and the underwriting commission was paid.
18
The directors resolved to redeem the preference shares out of the proceeds of the January share issue for $1.01 per share.
26
Cheques were issued to the preference shareholders.
April
15
50,000 shares were issued as a result of 50,000 options having been exercised, for which money had been received. The unexercised options lapsed.
Required
Prepare general journal entries to record the above transactions.
Cajun Ltd’s equity at 30 June 2013 was as follows:
400,000 ordinary shares, issued at $1.60, fully paid
$
640,000
450,000 ordinary shares, issued at $2, called to $1.10
495,000
170,000 redeemable preference shares, issued at $1, fully paid
170,000
Calls in advance (10,000 ordinary shares)
7,000
Share issue costs
(7,000)
General reserve
60,000
Retained earnings
310,000
The following events occurred during the year ended 30 June 2014:
2013
July
15
The final call, due 31 August, was made on the partly paid shares.
Aug.
31
All call money was received, except for that due on 23,000 shares.
Sept
10
In accordance with the constitution, the shares on which the call was unpaid were forfeited. The company is entitled to keep any balance from forfeiture of shares.
Oct.
1
The company offered ordinary shareholders 1 option (at a price of 90 cents per option) for every 5 shares held. Each option entitled the holder to buy 1 ordinary share at a price of $1.50 per share, exercisable on or before 15 April 2014.
31
65,000 options were taken up by shareholders, for which all money due was received.
2014
Jan.
3
A prospectus was issued, inviting applications for 90,000 ordinary shares at an issue price of $2, payable in full on application. The purpose of the issue was to fund the redemption of the preference shares. The issue was underwritten at a commission of $5,900.
31
The issue closed fully subscribed, with all money due having been received.
Feb.
5
The 90,000 shares were allotted, and the underwriting commission was paid.
18
The directors resolved to redeem the preference shares out of the proceeds of the January share issue for $1.01 per share.
26
Cheques were issued to the preference shareholders.
April
15
50,000 shares were issued as a result of 50,000 options having been exercised, for which money had been received. The unexercised options lapsed.
Required
Prepare general journal entries to record the above transactions.