Question

Royal Park Ltd is an existing company that has issued previously 300,000 ordinary shares of $8 each and 100,000 5% preference shares of $15 each.

On 1^st January 2019, Royal Park Ltd offered to issue an additional 250,000 ordinary shares for $11, payable in two installments:

• $7 initially on application;
• $4 payable based on calls as required.

Applications for 400,000 shares were received by the closing date of 30^th January 2019.

On 10^th February 2019, shares were allotted, and a refund was made to unsuccessful applicants.

Directors announced on 30^th June 2019 a profit after tax of $900,000.

On 7^th July 2019, the board of directors during the Annual General Meeting announced that the company will pay preference dividends and ordinary dividends of 6.2 cents per fully paid equivalent share from retained earnings.

On 3^rd August 2019, payment was made for dividends declared.

Required:

a) Prepare the general journal entries to record the information above.                   

Narrations are NOT required.

Answer 1

Solution: (Amounts in $)

Date	Particular	Amount Dr	Amount Cr
3o jan-19	Bank A/c Dr	28,00,000
	To equity share applications (400,000*7)		28,00,000
10th feb 19	equity share final call	10,00,000
	To equity share capital A/c.250000*4		10,00,000
10th feb	equity share application	10,00,000
	To equity share captial		10,00,000
10 feb-19	equity share application	10,50,000
	To bank(150,000*7)		10,50,000
10th feb 19	equity share application	750,000
	To retained earning(250,000*3).		750,000
30-june-19	p&l a/c	9,00,000
	To Retained Earnings		9,00,000
7-july-19	Retained Earnings	347,800
	To preference dividend payable		75,000
	Toequithy share payable		272,800
	(100,000*15*0.05)
	(550,000*8*6.2%)
3-aug-19	preference dividend payable	75,000
	equithy share payable	275,800
	To bank		347,800

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