The trial balance of Ikaneng Ltd included these balances as at 31 December 20x6:

The directors decided to write all issue expenses off and to issue capitalisation shares.

You are required to:

1 Show against which accounts the expenses and capitalisation issue can be written off:

a. Underwriters’ commission (preference shares).

b. Preliminary expenses.

c. Share issue expenses (ordinary shares). 

d. Capitalisation shares.

e. Share issue expenses (preference shares).

2. Show the general journal entries to write off these expenses:

Transcribed Image Text:

Ordinary share capital (100 000 ordinary shares) Preference share capital 50 000 redeemable preference shares (fixed annual dividend of 16c/share) Retained earnings 224 000 00 120 000 00 ** 190 000 00