QUESTION 1:
Trans Ltd’s equity as at 30 June 2008 was as follows:
120,000 ordinary A shares, issued @ $1.10, fully paid $132,000
150,000 ordinary B shares, issued @ $1.20, called to 70c 105,000
100,000 8% cumulative preference shares, issued @ $1, fully paid 100,000
Calls in advance (30,000 shares) 15,000
Share issue costs (11,200)
General reserve 160,000
Retained earnings 158,000
Total equity $658,800
The general journal is used for all entries, and the books are balanced 6-monthly (each 31 December and 30 June).
The following events occurred after 30 June 2008:
2008
30/09 The final 10c per share ordinary dividend and the preference dividend, both declared on 25 June 2008, were paid. Shareholder approval is not required for payment of dividends.
31/10 A prospectus was issued inviting offers to acquire 1 option for every 2 ordinary A shares held at a price of 80c per option, payable by 30 November 2008. Each option entitles the holder to 1 ordinary A share at a price of 70c per share and are exercisable in November 2010. Any options not exercised by 30 November 2010 will lapse.
30/11 Offers and monies were received for 50,000 options, and these were issued.
2009
15/01 The final call on ordinary B shares was made, payable by 15 February 2009.
15/02 All call monies were received.
20/04 50,000 preference shares were repurchased at $1.10 per share. The repurchase was accounted for by writing down preference share capital by $50,000 and...
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