Question 1:
Share capital of Bluestar Ltd at 31 March 2018 was as follows:
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Ordinary Shares 600,000
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Issue price of $8 each paid to $5
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Preference Shares 200,000
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Issue price of $8 each paid to $4
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At 31 March 2018, a further call of $3.00 on ordinary shares and $4 on preference shares was made. During the 3 months to 30 June 2018, all calls were duly received except those on 11,000 preference shares which were forfeited as at 30 June 2018. To bring capital back to the original amount of issued capital, the forfeited shares were offered to an investment company at a price of $7.00 per share paid to $8 and the transfer was completed on 30 September 2018. According to the company's constitution, shareholders' equity in forfeited shares must be refunded to them. On 31 October 2018, the previous owner of forfeited shares received a refund cheque for the amount due, less selling costs of $1,550.
Required: Prepare journal entries to record the above transactions. Narrations are required.
Question 2:
The equity of Mako Ltd at 1 July 2016 consisted of:
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Share Capital
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200,000 'A' ordinary shares - fully paid
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$200,000
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400,000 'B' ordinary shares issued for $1 and paid to 75c
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$300,000
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General reserve
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$50,000
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Contingencies reserve
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$100,000
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Retained earnings
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$75,000
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The following events occurred during the financial year 1 July 2016 to 30 June 2017:
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2016
October 1
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Shareholders ratified and declared a final dividend of 10c per share as
recommended by the directors on 29 June 2016 on all fully paid equivalent ordinary shares.
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October 20
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The final dividend was paid.
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December 21
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The directors declared and paid out of the contingencies reserve a one for five bonus issues on all 'A' ordinary shares. The price per share
was $1.
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2017
March 1
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An interim dividend of 5c per share was declared and paid on all fully paid equivalent ordinary shares.
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June 30
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The directors recommended a final dividend of 8c on all ordinary shares and resolved to transfer the remainder of the contingencies reserve back
to retained earnings.
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June 30
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The directors resolved to transfer $20,000 from the general reserve to retained earnings.
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June 30
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The profit for the year was $58,000.
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Required: Prepare journal entries to record the above transactions. (Narrations are not required for this problem.)