At the beginning of the reporting period, it has $5 million of share capital and 1.5 million ordinary shares outstanding. On 1 April 2022, the company announces a bonus issue of 2 shares for every share held on that date. By the end of the year, Himalaya Ltd.’s profit attributable to ordinary shareholders amounts to $5,250,000. (The year 2022)

The year 2023:

Himalaya Ltd. needs to raise funds for the expansion of its business. Ms. Natasha Romanoff, CEO, and Mr. Clint Barton, CFO have decided to make a non-renounceable rights issue to existing shareholders of 250,000 new shares at an issue price of $20 per share.

Goldman Sachs has agreed to fully underwrite the rights issue. Himalaya Ltd issued a prospectus on 1 February 2023 and applications closed on 3 April 2023. Costs associated with the rights issue and the eventual issue of the shares were $45,000.

Required
For the year ending December 2023:

1. Prepare the journal entries for the rights issue and the subsequent share issue made by Himalaya Ltd., assuming that 75% of the rights were exercised by the due date.

2. Prepare the journal entries assuming that the rights issue was not underwritten and that any unexercised rights lapsed.