Reference no: EM132554436
On 1st July, 2019 Bellhope Ltd has Shareholders Funds worth $600,000 comprising of share capital of $500,000 and Retained Earnings of $100,000.
On 5th July the directors invited applications for 120,000 shares payable $3 on application, $2 on allotment and $1 on a call to be 3 months after allotment.
By 31st July application money had been received for 150,000 shares. On 3rd August, the directors allotted 120,000 shares to applicants on the basis of 4 shares for every 5 applied for. The surplus application money was offset against the amount payable on allotment. The balance of allotment money was received by 12 August.
On 15th November the directors made the final call of $1 on the shares. All money was received by 30th November except for one shareholder who held 10,000 shares.
By 31st December a profit of $250000 had been made and the directors decided to provide for an income tax liability of $60000, declare dividends payable of $32000 and transfer $50000 to General Reserve account.
Required:
Question 1: Prepare journal entries to record the above transactions in the general journal. (Narrations not required)
Question 2: Prepare the Shareholders Fund Section of the Balance Sheet.
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