Question

In: Accounting

La Sfera Co. was formed on July 1, 2014. The company reported the following summarized statement...

La Sfera Co. was formed on July 1, 2014. The company reported the following summarized statement of financial position at July 1, 2017:

RM

Assets

Cash

472,000

Other assets

1,680,000

Total assets

2,152,000

Liabilities and Equity

Liabilities

Other liabilities

546,000

Ordinary dividend payable

35,000

Shareholders’ equity

7% preference shares, 300,000 authorised, 50,000 issued

250,000

Ordinary share, 500,000 authorised, 250,000 issued

750,000

Retained earnings

571,000

Total liabilities and equity

2,152,000

The following transactions occurred during the financial year but have not been recorded:

July 1, 2016

Paid dividends payable to shareholders.

Aug 15, 2016

Issued 50,000 ordinary shares to the public for RM5 per share. The company incurred RM4, 000 on the costs of issuance of shares.

Nov 23, 2016

Offered right issue to existing shareholders, with the right to purchase one shares for every 80 shares held. Market price on the date was RM5. All offers were taken up.

Feb 1, 2017

Obtained a 6-month loan amounting RM 25,000 from JuneBank at 4% per year to expand the business.

Mar 7, 2017

Declared and distributed one-for-fifty share dividend to shareholders on record. Market value per share was RM6. The company used its retained earnings for the purpose of giving bonus share.

May 18, 2017

Declared cash dividend to ordinary shareholders of RM0.20 per share, subject to approval at the forthcoming annual general meeting.

June 1, 2017

Issued 10% three-year bonds payable with a RM150, 000 par value at the price of RM133, 540. The current market interest rate is 12%.

June 30, 2017

Payment of cash dividend to ordinary shareholders has been approved. The money will be credited to ordinary shareholders in July 15, 2018.

Paid preference dividend.

Required:

Journalise the above transactions.

Prepare the statement of financial position as at December 31, 2017.

Solutions

Expert Solution

PArt 1

Date Particulars Debit (RM) Credit (RM)
1-Jul Dividend Payable 35000.00
Cash 35000.00
(dividend payable paid)
15-Aug Cash 250000.00
Share Capital 150000.00
Premium on Share Capital 100000.00
(share capital issued at premium with $3 per share par value)
15-Aug Share Issue Expenses 4000.00
Cash 4000.00
(share issue expenses)
23-Nov Cash 18750.00
Share Capital 11250.00
Premium on Share Capital 7500.00
(right share issued)
1-Feb Cash 25000.00
Loan 25000.00
(loan received recorded)
7-Mar Retained Earning 36450.00
Common Stock Dividend Payable 18225.00
Premium on Share Capital 18225.00
(stock dividend issued with share value deemed to be RM 3)
18-May Retained Earnings 60750.00
Dividend Payable 60750.00
(dividend declared recorded)
1-Jun Cash 133540.00
10% Bonds Payable 133540.00
(bonds payable issue recorded)
15-Jul Dividend Payable 60750.00
Cash 60750.00

PART 2

Particulars Amount
Assets RM
Cash 799,540
Other assets 1,680,000
Total assets 2,479,540
Liabilities and Equity
Liabilities
Other liabilities 571,000
10% Bonds Payable 133,540
Shareholders’ equity
7% preference shares, 300,000 authorised, 50,000 issued 250,000
Ordinary share, 500,000 authorised, 250,000 issued 929,475
Share Premium 125725
Retained earnings 469,800
Total liabilities and equity 2,479,540

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