Company formation and share capital
Cajun Ltd's equity at 30th June 2011 was as follows:
400 000 ordinary shares , issued at $1.60 fully paid $640 000
500 000 ordinary shares , issued at $2, called to $1.20 600 000
180 000 redeemable preference shares, issued at $1, fully paid 180 000
Calls in advance (10 000 ordinary shares) 8 000
Share issue costs (7 000)
General reserve 60 000
Retained earnings 310 000
The following events occurred during the year ended 30th June 2012:
July 15 the final call. Due 31st August, was made on the partly paid shares
Aug 31 all call money was received, except for that due on 24 000 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 ordinary shareholders 1 option (at the price of 80 cents per option) for every 5 shares held. Each options entitled the holder to buy one ordinary share at a price of $1.50 per share, exercisable on or before 15th April 2012.
Oct 31 70 000 options were taken by shareholders, for which all money due was received.
Jan 3 a prospectus was issued, inviting application for 100 000 shares at an issue 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 $6 700.
Jan 31 the issue closed fully subscribed, with all money due having been received.
Feb 5 the 100 000 shares were allotted, and the underwritting commission was paid.
Feb 18 the directors resolved to redeem the preference shares out of the proceeds of January share issue for $1.06 per share.
Feb 26 cheques were issued to preference shareholders.
April 15 52 000 shares was issued as a result of 52 000 options having been exercised, for which money have been received. The un-exercised options lapsed.
Prepare general journal entries to record the above transaction.
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