ASSIGNMENT 02 Question1 (15 marks: 27 minutes) On 1 January 20x0, the company wa

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ASSIGNMENT 02 Question1 (15 marks: 27 minutes) On 1 January 20x0, the company was incorporated with an authorised share capital of 150 000 ordinary shares and 50 000 preference shares (fixed annual dividend of 10c/share). The post closing trial balance of Coral Limited as at December 20x2 after the provisional statement of profit or loss & other comprehensive income was drafted is shown. Coral Limited POST-CLOSING TRIAL BALANCE AS AT 31 DECEMBER 20x2 Details Fol. Debit Credit Ordinary share capital (100 000 shares @RI B1 100 000 00 cac share premium B2 B3 5 00000 43 000 00 40 000 00 Retained earnin Preference share capital (40 000 preference B4 shares @RI Each Land and buildings Plant and Machi Underwriting commission- Preference shares B7 Share issue ex Bank B5 B6 100 000 00 60 000 00 4 000 00 B8 B9 2 00000 22 00000 erenc Additional information The directors decided, with the necessary general meeting approval, to implement these decision on 1 January 20x3 in this order: 1) The a share capital must be converted to 150 000 ordinary shares no par value. 2) The preference shares are to be redeemed at a premium of 5c/share. 3) The redemption of the preference shares must be financed partly from the issue of 10 000 ordinary shares @R2/share and partly out of the current bank balance. 4) The ordinary share were offered to the public. The issue was underwritten in full by Down-Under Ltd for an underwriting commission of 6% The public subscribed for 8 000 shares. All the shares were allotted on J Share issue expenses amounted to R500. a- b. c. d. anuary 20x3

Explanation / Answer

Amount in $ Date General Jounral Debit Credit NO Entry required for conversion of authorised share capital January 1, 20X3 Preference Share capital 40000 Premium on redemption of preference shares 2000 Cash 42000 January 1, 20X3 Cash 20000 Ordinary share capital 20000 January 1, 20X3 Underwriting Commission-Ordinary shares 1200 Share Issue Expenses 500 Cash 1700 January 1, 20X3 Preference shareholder 42000 Cash 42000 January 1, 20X3 Write-Off 7700 Underwriting commission-preference shares 4000 Underwriting commission-Ordinary shares 1200 Share Issue expenses-Preference shares 2000 Share Issue expenses-Ordinary shares 500 January 1, 20X3 Retained earnings 27500 =(1/8)*110000*2 Ordinary share capital 27500

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