Reference no: EM132979131

The equity of Kenselmac Ltd at 14 February 2020 consisted of the following.

Share capital 800 000 shares (fully paid for $2) $1 600 000 600 000 shares (paid to $1, issued at $2) 600 000

General reserve 100 000

Plant replacement reserve 50 000

Retained earnings 125 000

The following events occurred during 2020.

Feb. 15 Interim dividend of 10c per share declared and paid.

April 2 Final call made on the 600 000 partly paid shares.

May 30 All call money received.

June 30 Profit before tax for the year was $700 000 out of which the following adjustments were made (if appropriate):

1. Income tax expense was determined as $250 000.

2. Final dividend of 5c per share on all issued shares was recommended.

3. Transfers to reserves: General reserve $40 000 Plant replacement reserve $30 000

4. Directors revalued the company's properties by $300 000.

Aug. 15 Shareholders approved the final dividend and a 1-for-5 bonus issue of shares at a price of $1 per share to be satisfied out of the surplus arising from revaluation of properties.

Aug. 16 Payment of final dividend and allotment of bonus shares

Required

Problem (a) Provide general journal entries for the above transactions.

Problem (b) Show the Retained Earnings account up to 31 August 2020.

Problem (c) Show the equity section of the statement of financial position as at 31 August 2020