Motsamai Ltd was registered on 1 April 2018 with an authorised share capital of 500 000...

   

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Motsamai Ltd was registered on 1 April 2018 with an authorised share capital of 500 000 ordinary shares of R2,00 each. 250 000 ordinary shares were taken up and paid for by the founders and the public at R3,00 each. Due to a cash flow problem the board of directors decided not to declare a dividend at the end of the current financial year, 31 March 2019, but to issue capitalisation shares at par at the ratio of 1 ordinary share for every 5 ordinary shares held. The retained earnings for the for the year ended 31 March 2019 amounted to R301 500. QUESTION 6 Which one of the following alternatives represents the correct journal entry that must be made on 31 March 2019 in the general journal of Motsamai Ltd to record the issue of the capitalisation shares? 1. 23 Application and allotment Ordinary share capital Debit R Credit R 150 000 150 000 3. 2. Application and allotment: Ordinary shares Ordinary share capital Debit R 150 000 Retained earnings Bank Credit R 150 000 Debit R Credit R 100 000 100 000 Debit R Credit R Retained earnings Ordinary share capital 150 000 150 000 Motsamai Ltd was registered on 1 April 2018 with an authorised share capital of 500 000 ordinary shares of R2,00 each. 250 000 ordinary shares were taken up and paid for by the founders and the public at R3,00 each. Due to a cash flow problem the board of directors decided not to declare a dividend at the end of the current financial year, 31 March 2019, but to issue capitalisation shares at par at the ratio of 1 ordinary share for every 5 ordinary shares held. The retained earnings for the for the year ended 31 March 2019 amounted to R301 500. QUESTION 6 Which one of the following alternatives represents the correct journal entry that must be made on 31 March 2019 in the general journal of Motsamai Ltd to record the issue of the capitalisation shares? 1. 23 Application and allotment Ordinary share capital Debit R Credit R 150 000 150 000 3. 2. Application and allotment: Ordinary shares Ordinary share capital Debit R 150 000 Retained earnings Bank Credit R 150 000 Debit R Credit R 100 000 100 000 Debit R Credit R Retained earnings Ordinary share capital 150 000 150 000

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