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Sugar Ltd was involved in the following transactions during 1 July 2019 to 30 June 2020...

Sugar Ltd was involved in the following transactions during 1 July 2019 to 30 June 2020 financial period.

  1. On 5 November 2019 the directors of the company decided to raise extra capital by issuing 2 million ordinary shares publicly at a price of $2 each share. The company received application monies of $4,800,000 for 2.4 million shares on 30 November.
  2. The company decided to allot shares to applicants on the basis of 10 shares for every 12 shares applied for on 30 December.
  3. On 30 December, the excess amounts paid on application were refunded to applicants after the allotment.
  4. The funds raised were transferred to the company’s business account.
  5. The company paid $300,000 interim dividends from prior retained earnings to ordinary shareholders on 7 February 2020.
  6. The company issued 280,000 bonus shares at a price of $2 per share from general reserve on 30 June 2020.
  7. The company earned $700,000 profit during the financial year ended 30 June 2020.

Required:

Provide journal entries to record the above transactions for 2019/2020 financial year. (Narrations are required)

Solutions

Expert Solution

Below are the setup entry to be poste from money received from share application to till converted to Equity and Bonus share issue

For profit for the year no entry required, day to day business entry accountes separately, no information available here.

Nov 5th 2019
Bank account Dr 480000
Share application CR 480000
(Being share application money received)
Shares allotted
Share application DR 400000
Share capital CR 400000
30th Dec
Share application DR 80000
Bank CR 80000
Exces share applcation money refunded
7th Feb
Prior Retained Earning DR 300000
Divindend CR 300000
(Being Divinded declared from RE)
Dividend DR 300000
Bank CR 300000
(Being Dividend Paid)
30th Jun3 2020
General reserse DR 560000
Equity Sahre capital CR 560000
(Bonus Shared issued)

ekkarill92 answered 1 year ago
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