Reference no: EM132982776
Question - E-Commerce Ltd was incorporated with authorized share capital consisting of 500 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.
On the 01 January 2019, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par. Legal, advertising and marketing expenses of N$ 75 000 relating to the establishment of the company, were incurred and paid for on 02 February 2019.
During the year of 2019, the remaining shares were offered to the public as follows:
The offer for the subscription of share opened on 01 March 2019 and closed on 25 March 2019.
The ordinary shares were offered at a premium of 30c per share and the preference shares were offered at par. The issue is being underwritten by E-Trade Underwritten Ltd for a commission of 5%. A total of 600 000 preference shares and 1 500 000 ordinary shares were applied for.
Allotment of shares took place on 15 April 2019 and the available shares were allotted and the necessary refunds made. On 21 April 2019, the terms with the underwriters' agreement were implemented. All share issue and preliminary expenses should be written off against the share premium account.
You are required to:
1. Record the transactions (from 01 March 2019 - 15 April 2019) with regard to the issue of the shares in the general journal of E-Commerce Ltd. No narrations required.
2. Calculate the underwriters commission amount that is payable to E-Trade Underwriters Ltd. (Hint: consider the full subscription of ordinary shares + full subscription of preference shares)
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