A trial balance taken from Galston Ltds accounting records at 30 September 2016 showed the following account
Question:
A trial balance taken from Galston Ltd’s accounting records at 30 September 2016 showed the following account balances:
Galston LTD Trial Balance as at 30 September 2016 | |||||||||
Account | Debit | Credit | |||||||
Share capital (700 000 shares fully paid) General reserve Retained earnings Current tax liability Accounts payable Mortgage payable Bank overdraft (current) Other liabilities (current) Property, plant and equipment (net) Accounts receivable Inventory Prepayments Patent | $ 890800 90200 370600 1000 100000 | $ 700000 240000 117800 30000 120900 180000 60600 3300 | |||||||
$1452600 | $1452600 | ||||||||
At a meeting of directors on 1 October, it was decided to issue additional shares to fund future operations. Accordingly a prospectus was issued on 10 October offering 400 000 ordinary shares at $1 each to the public, payable 50c per share on application, 25c per share on allotment and the remainder in one call when required.
By 30 November, applications were received from the public for 24 000 shares in excess of the number available, and the application money paid in on 24 000 shares was refunded to unsuccessful applicants. The rest of the shares were allotted to the successful applicants, including one who had paid in full on application for 4000 shares. The share issue had been underwritten for a fee of $8000.
By 15 December, all cash due on allotment had been received, and the underwriting fee was paid on this date.
On 31 January 2017, an interim dividend of 6c per share was paid out of retained earnings on all fully paid equivalent shares.
On 28 February, the remaining call on the shares was made, and all cash was received on the call by 31 March, except for the holder of 7000 shares.
Required
A. Prepare journal entries in general journal form to record the above transactions.
B. Prepare the following accounts in T-account format to show the effect of the above transactions: Share Capital, Application, Allotment, and Call.
C. Prepare a statement of changes in equity for the six months ended 31 March 2017, assuming that the profit made by the company during that period amounted to $120000.
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett