Assignment 02 Question 1 (25 marks) Le Grange Ltd was incorporated with authorized share capital consisting of 500 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each. On the 01 January 2014, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par. Legal, advertising and marketing expenses of N$ 75 000 relating to the establishment of the company, were incurred and paid for on 02 February 2014. During the year of 2014, the remaining shares were offered to the public as follows: The offer for the subscription of share opened on 01 March 2014 and closed on 25 March 2014. The ordinary shares were offered at a premium of 30c per share and the preference shares were offered at par. The issue is being underwritten by Le Grange Underwritten Ltd for a commission of 5%. A total of 600 000 preference shares and 1 500 000 ordinary shares were applied for. Allotment of shares took place on 15 April 2014 and the available shares were allotted and the necessary refunds made. On 21 April 2014, the terms with the underwriters' agreement were implemented. All share issue and preliminary expenses should be written off against the share premium account. You are required to: Record the transactions (from 01 March 2014 - 15 April 2014) with regard to the issue of the shares in the generallournal of Le Grangeltd. Narrations are required. (19 marks) Calculate the commission amount that is payable to Le Grange Underwriters Ltd. (4 marks) Prepare the journal entry to write off the preliminary expenses. (2 marks) Question 3 (21 marks) Brown and James are the sole members in Tendesius cc, a business enterprise which organises fun and walks. They have an equal share in the profits and losses and they each contributed N$ 2500 to start the corporation in 2015. On 1 March 2018, Fun & Walks (Pty) Limited made an offer to take over Tendesius cc. At that date the members loan was payable to James Brown did not want to take up the offer so he asked to be paid out. The statement of financial position of Tendesius cc at 28 February 2018 was as follows: ASSETS Non-current assets Cost Carrying amount Accumulated depreciation 12 500 5000 12 500 3000 Motor vehicles 2000 Current assets Inventory Accounts receivable Bank TOTAL ASSETS 39 000 22 500 7500 9000 54 500 EQUITY AND LIABILITIES Members Funds Members contributions Undrawn profits Non-current liabilities Members loan 35 000 5000 30 000 I I 15 000 Current liabilities Accounts payable TOTAL EQUITY AND LIABILITIES 4 500 54 500 Fun & Walk (Pty) Limited offered to pay Tendesius cc N$ 100 000 to take over the business as a going concern. The payment was structured as follows: . N$ 42 500 paid in cash-to pay Brown for his share of business. N$ 42 500 by a fresh issue of ordinary share Fun & Walk (Pty) Limited at N$ 1 each- to pay James for his share of the business. NS 15 000 by an issue of 150 debentures of N$ 100 each in Fun & Walk (Pty) Limited to repay the members loan to James in the ce. The land and building taken over were considered to be worth N$ 37 500 Page 17 of 19