Somerset Limited was formed on 1 January 2015 with an authorised capital consisting of 150 000...

 

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Somerset Limited was formed on 1 January 2015 with an authorised capital consisting of 150 000 ordinary shares and 50 000 redeemable preference shares (dividend of 8c per share). The subscribers to the memorandum subscribed for and paid for 4 000 ordinary shares at R1 each and were allotted the shares on 1 January. The company then offered to the public 96 000 ordinary shares at R1.10 per share and all of the preference shares at R1 each. The ordinary share issue was underwritten by Albany Finance Limited for a commission of 5% of the issue price. The public applied for 60 000 preference shares and 90 000 ordinary shares and all application money, including that from the underwriters, was received by 4 January. The shares were allotted on 8 January. On the same date the company paid the underwriting commission, formation (preliminary) expenses of R3 000 and the refunds to the unsuccessful applicants for preference shares. The preference shares are redeemable by the company on 1 January 2019 at R1 each. On 28 February the company purchased a piece of land on a central city site for R150 000. During the year the company made a profit of R1 458. The bank balance on 31 December 2015 was R2 778. REQUIRED: Prepare: Journal entries to record the above transactions. Narrations may be omitted. Closing entries are not required. (a) The Statement of Financial Position at 31 December 2015 and Statement of Changes in Equity for the year ended 31 December 2015 of Somerset Limited. These statements should comply with International Financial Reporting Standards (insofar as the necessary information is given above). (b) Somerset Limited was formed on 1 January 2015 with an authorised capital consisting of 150 000 ordinary shares and 50 000 redeemable preference shares (dividend of 8c per share). The subscribers to the memorandum subscribed for and paid for 4 000 ordinary shares at R1 each and were allotted the shares on 1 January. The company then offered to the public 96 000 ordinary shares at R1.10 per share and all of the preference shares at R1 each. The ordinary share issue was underwritten by Albany Finance Limited for a commission of 5% of the issue price. The public applied for 60 000 preference shares and 90 000 ordinary shares and all application money, including that from the underwriters, was received by 4 January. The shares were allotted on 8 January. On the same date the company paid the underwriting commission, formation (preliminary) expenses of R3 000 and the refunds to the unsuccessful applicants for preference shares. The preference shares are redeemable by the company on 1 January 2019 at R1 each. On 28 February the company purchased a piece of land on a central city site for R150 000. During the year the company made a profit of R1 458. The bank balance on 31 December 2015 was R2 778. REQUIRED: Prepare: Journal entries to record the above transactions. Narrations may be omitted. Closing entries are not required. (a) The Statement of Financial Position at 31 December 2015 and Statement of Changes in Equity for the year ended 31 December 2015 of Somerset Limited. These statements should comply with International Financial Reporting Standards (insofar as the necessary information is given above). (b)

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