ACCT6003 Financial Accounting Processes, Laureate International University

Part A Question

Scenario 1

Q.1 Preparing General Journal Entries To Record The Above Transactions

Date

 

 Particulars

Ref.no

Debit

      Credit

01/09/18

Redeemable preference share capital a/c

Premium of redemption preference share capital

                                    to preference shareholders

( 40000 preference share at 6% redeemable and 5% premium from the retained earning)

 

2400

2000

 

 

       4400

25/08/18

Preference shareholders a/c

                                      to bank a/c

(cheque issued  to preference shareholders)

 

4400

 

       4400

01/11/18

Cash at bank a/c (51200*.40)

                                to equity share application a/c

(application money received for right share issues)                    

 

194560

 

       194560

30/11/2018

 

 

Equity share application a/c

discount on issues of share a/c

                                      to equity share capital a/c

(ownership is given 1 share for 5 held)

 

 

194560

10240

 

 

 

        204800

 

20/12/16

Underwriters brokers a/c                                    

                                       to bank a/c

(underwriting commission paid)

 

4800

 

           4800

10/01/19

General reserve a/c

                                 Retained Earning A/c

(director transfer $56000 from retained earning to general reserve)

 

56000

      

   56000

28/02/19

Share application a/c

                                 share capital a/c

(Class 3 shares are issued at a price of $3.60)

 

201600

 

    201600

 

30/04/19

Share capital a/c

                                   share application a/c

(Unexercised option lapse)  

 

201600

                                 

       201600

31/05/19   

 

   Shares final call a/c

                                    share capital a/c

(the final call is paid up on partly paid up shares but 12000 share money due)

 

 

364800

 

     364800

18/06/19

 Share capital a/c

                                 Forfeited share a/c

                                  share final call a/c

(Forfeiture of 12000 shares of $4 each due to non payment of final call of $1.60 per share)

 

48000

        

               28800

               19200

26/06/19

Bank a/c

Forfeited a/c

                                    share capital a/c

(forfeited share are reissued at discount price)

 

43200

  4800

 

 

          48000

26/06/19

Forfeited shares a/c

                                     capital reserve a/c

(after reissue of share forfeiture a/c transferred to capital reserve account)

 

4800

 

             4800

27/16/19

Share holders a/c

                                            forfeited share a/c

 

(pay refund to formal holders of forfeiture shares)

 

4800

 

         4800

Working note:-

Portfolio value before right issue= 320000*4=1280000 $

  1. of right shares=  (256000 *1/5)= 51200

cost of purchasing new share using the rights=51200*3.80= 194560

b. Preparing The Equity Section of Chiherbals Statement of Financial Position :-

Shareholders  Equity

  Amount (in $)

64000 shares of ordinary class 1 shares issued at $4                            

256000

256000 rights shareholders of class 1 issued 3.80$

972800

Scenario 2

a. Journal entries of  ChiHerbal Ltd and classifies Residential land and Factory land as different classes of assets.:-

Date

                                   particulars

Debit

 &n

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