Reference no: EM132812504
The company needs to raise fund to finance its expansion programs. On 1 April 2017 Hanami Bhd. makes a public issue of 20,000,000 ordinary shares at a price of RM2.00 each. On the same day, the company also issued 5,000,000 7% preference shares at RM1.50 per share, payable in full on application. As for the dividend payable to preference shareholders, it is being classified as non-mandatory.
The extraction of Statement of Financial Position for Hanami Bhd. as at 31 December 2016 was as follows:
Share Capital (Issued and paid-up) 45,000,000
Ordinary shares 60,000,000 8,000,000
7% Preference shares 10,000,000
Reserves
Retained earnings 15,000,000
- On 30 June 2017, applications of 22,000,000 ordinary shares were received from both institutional and retail investors. An equal application was also received for the issuance of 7% preference shares on the same date. The money received on oversubscribed shares were refunded to the applicants.
- In order to generate more funds, on 1 July 2017 the company issued RM1, 000,000 6% Debentures at 98 with an issuance cost of RM10, 000. It is assumed that the effective interest rate is 8%. The interest on debentures was paid at the end of the year. All debentures were taken up and fully paid. This debenture is carried out at amortized cost.
Problem 1: First, you are required to prepare the relevant journal entries to record all the above transactions for the year ended 31 December 2017.
Problem 2: Second, you are required to prepare the Statement of Financial Position (extract) as at 31 December 2017. (Equity and Liabilities sections only.)