At the beginning of the reporting period, it has $5 million of share capital and 1.5 million
Question:
The year 2023:
Himalaya Ltd. needs to raise funds for the expansion of its business. Ms. Natasha Romanoff, CEO, and Mr. Clint Barton, CFO have decided to make a non-renounceable rights issue to existing shareholders of 250,000 new shares at an issue price of $20 per share.
Goldman Sachs has agreed to fully underwrite the rights issue. Himalaya Ltd issued a prospectus on 1 February 2023 and applications closed on 3 April 2023. Costs associated with the rights issue and the eventual issue of the shares were $45,000.
Required
For the year ending December 2023:
Prepare the journal entries for the rights issue and the subsequent share issue made by Himalaya Ltd., assuming that 75% of the rights were exercised by the due date.
Prepare the journal entries assuming that the rights issue was not underwritten and that any unexercised rights lapsed.
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones