QUESTION ONE

a$)$ Compare and contrast between a stock and a bond $(5$ marks$)$

b$)$ The authorized and issued share capital of Burn Ltd was Shs$.750,000$ divided into $75,000$ ordinary shares of Kshs$.10$ each fully paid. On January $22020$ the authorised capital was increased by a further $85,000$ ordinary shares of shs$.10$ each. to Shs$.1,600,000.$ On the same day $40,000$ ordinary shares of Shs$.10$ were offered to the public at $12\mathrm{.}50$ per share.

Payments were as follows

$-6/=$ on application $($Including premium$)$

$3\mathrm{.}50$ on allotment

$3\mathrm{.}00/=$ 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 Accounting entries to record these transactions $($ t accounts$)(10$ Marks$)$