ACCT6003 Financial Accounting Processes, Laureate International University

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 :-

Scenario 2

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

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