Reference no: EM132920407
Problem - Peacock Ltd commenced operations on 1 July 2020, and issued a prospectus offering 500,000 ordinary shares to the public at an issue price of $2.50. The shares were payable $1.50 on application and $1 on allotment (due 31 August).
By 31 July, applications had been received for 525,000 shares. The shares were allotted on this date, and a refund was provided to unsuccessful applicants. By 31 August, all allotment money had been received, and underwriter's commission of $9,500 was paid.
On 1 October, Peacock Ltd issued 25,000 options at no charge to existing ordinary shareholders. Each option entitles the holder to buy one ordinary share at an exercise price of $2.10, exercisable on 31 October. All options were exercised on that date.
On 1 January 2021, the directors decided to make a 1-for-5 bonus issue out of retained earnings. The bonus shares were valued at $2 each.
On 31 July 2021, a final ordinary dividend of 20 cents per share was declared. This dividend was subsequently paid on 16 July.
Required - Make the journal entries to record the transactions of Peacock Ltd for the events outlined above. Narrations are required. Show all workings and calculations.