Bright Ltd made an offer to the public for investors to subscribe for 500,000 shares. The shares were issued at $15.00 per share. Applications for shares closed on 8 September 20X1, with $5.00 being paid on application and a further $10.00 being payable within one month of allotment. By 8 September 20X1 applications had been received for 600,000 shares, and it is decided that all subscribers will receive shares on a pro rata basis, with any excess paid on application to be offset against the amount due on allotment. The shares were allotted on 22 September 20X1.

Required: a) Provide the journal entries to account for the above events. (10 marks) b) What forms of preferential treatment can the holders of preference shares receive over and above the rights of holders of ordinary shares? (2 marks)