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On 1 July 2013, ABC Limited provided a total of 5 million options to three of its key executive managers. The options were valued at $0.50 each and allowed the executives to acquire ordinary shares in the company for $5.00 each. The options could be exercised by 30 June 2014, after which time they would lapse.

On 5 July 2014, the directors offered to shareholders the rights to acquire additional shares in ABC Limited for $3.50 per share. The shares were to be fully paid on application and all applications had to be received by 1 September 2013. The total number of shares on offer through the rights issue was 10 million, with total expected subscriptions of $35 million. At the time of the rights issue, there were 25 million ordinary shares issued and fully paid up in the company.

1.On 30 June 2014, the directors declared an ordinary dividend of $0.05 per share. The company's constitution gave them the power to make such a declaration legally binding.

Provide the journal entries in the accounts of ABC Limited to record the event.

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  • Category:- Accounting Basics
  • Reference No.:- M939970

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