The authorized and issued share capital of Burn Ltd was Kshs. 750,000 divided into 75,000 ordinary...

 

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The authorized and issued share capital of Burn Ltd was Kshs. 750,000 divided into 75,000 ordinary shares of Kshs.10 each fully paid. On January 2 2020 the authorised capital was increased by a further 85,000 ordinary shares of Kshs.10 each. to Kshs. 1,600,000. On the same day 40,000 ordinary shares of Kshs. 10 were offered to the public at 12.50 per share. Payments were as follows. • 6/= on application (Including premium) . 3.50 on allotment 3.00/= on final call was paid on April 6, 2020 The list was closed on January 10, 2020 and by that date applications for 65,000 shares were received. Applicants for 5000 shares were rejected and cash paid for these shares were returned All shares were then allotted to the remaining applicants prorate to their original applications. The balance of monies received on application being applied to the monies due on allotment The balances due on allotment were received on January 31, 2020. Required a) Prepare journal entries to record these transactions (8 Marks) b) Prepare the various accounts to show the entries of all transactions (8 Marks) The authorized and issued share capital of Burn Ltd was Kshs. 750,000 divided into 75,000 ordinary shares of Kshs.10 each fully paid. On January 2 2020 the authorised capital was increased by a further 85,000 ordinary shares of Kshs.10 each. to Kshs. 1,600,000. On the same day 40,000 ordinary shares of Kshs. 10 were offered to the public at 12.50 per share. Payments were as follows. • 6/= on application (Including premium) . 3.50 on allotment 3.00/= on final call was paid on April 6, 2020 The list was closed on January 10, 2020 and by that date applications for 65,000 shares were received. Applicants for 5000 shares were rejected and cash paid for these shares were returned All shares were then allotted to the remaining applicants prorate to their original applications. The balance of monies received on application being applied to the monies due on allotment The balances due on allotment were received on January 31, 2020. Required a) Prepare journal entries to record these transactions (8 Marks) b) Prepare the various accounts to show the entries of all transactions (8 Marks)

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Answer a January 2 2020 Increase in authorized share capital Ord... View the full answer