The equity balances for Acacia Ltd at the 1 July 2018 comprised the following: S
ID: 2464182 • Letter: T
Question
The equity balances for Acacia Ltd at the 1 July 2018 comprised the following:
Share capital
$2 988 000
(All ordinary shares, issued and paid to $5, less issue costs of $12 000)
Retained earnings
$7 600 400
$10 588 400
On 1 October 2018, Acacia Ltd issued a prospectus for applications for 200 000 ordinary shares to the public at an issue price of $7, payable $2.50 on application, $1.50 on allotment and the remaining $3 in future call(s) as determined by the directors.
By 1 December applications had been received for 240 000 ordinary shares with $2.50 attached.
At a directors’ meeting on 5 December, it was decided to reject applications for 40 000 shares and issue shares to the remaining applicants.
Share issue costs of $4000 were paid on 5 December. All outstanding allotment money was received by the 1 January 2019.
The first call for $2 was made on 1 February 2019 with all money received by 20 February. The final call for $1 was made on 20 June 2019. At 30 June 2019 this call money had not been received in relation to 25 000 shares.
Required
A. Prepare the journal entries to record the transactions of Acacia Ltd as outlined above. (Show all workings.)
B. Calculate the amount of share capital in the statement of financial position of Acacia Ltd as at 30 June 2019 (Show all workings.)
Share capital
$2 988 000
(All ordinary shares, issued and paid to $5, less issue costs of $12 000)
Retained earnings
$7 600 400
$10 588 400
Explanation / Answer
ACACIA LTD
(i)
2018
To 1 Dec
Cash Trust
Dr
600 000
Application
Cr
600 000
(being receipt of applications)
5 Dec
Application
Dr
500 000
Allotment
Dr
300 000
Share Capital
Cr
800 000
(being issue of shares)
Application
Dr
100 000
Cash Trust
Cr
100 000
(being refund to unsuccessful applicants)
Share Capital/Share Issue Costs
Dr
4 000
Cash/Payables
Cr
4 000
(being payment of share issue costs)
Cash
Dr
500 000
Cash Trust
Cr
500 000
(transfer of application money)
2019
To 1 Jan
Cash
Dr
300 000
Allotment
Cr
300 000
(being receipt of allotment money due)
1 Feb
Call
Dr
400 000
Share Capital
Cr
400 000
(being first call for $2)
To 20 Feb
Cash
Dr
400 000
Call
Cr
400 000
(being receipt of call money)
20 June
Second (or Final) Call
Dr
200 000
Share Capital
Cr
200 000
(being final call for $1)
To 30 June
Cash
Dr
175 000
Second (or Final) Call
Cr
175 000
(being receipt of call money)
(ii) The amount of share capital in the statement of financial position of Acacia Ltd as at 30 June 2019 is $4,659,000.
Beg balance $2,988,000
+ new share issue 1,400,000 (200,000 * $7)
-less costs (4,000)
-less calls in arrears (25,000)
Total $4,359,000
2018
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