Fairweather Manufacturing Ltd (FML) is a public company and wasincorporated a number of years ago and has been verysuccessful.

The equity section of the balance sheet of the company at the 30th June 20X3 is providedbelow:

OWNERS' EQUITY $

Issued Capital 42,500,000

Reserves 12,245,000

Retained profit 3,276,500

TOTAL OWNERS' EQUITY 58,021,500

The company's financial year ends on 30th June.

Additional Information:

1. Issued capital is comprised of:

· 3,125,000 ordinary shares all issued at $8.00 each

· $17,500,000 of 2.5%pa preference shares. Dividends on these shares arepaid six monthly on the first day of October and April each year.

2. Reserves is comprised of:

· General Reserve of $7,630,000

· Asset Revaluation Reserve of $4,615,000

A list of ordinary shareholders and their holdings as at 30th June 20X3 is provided on thenext page. Note:

· DRP = "Y" elected to be in the dividend reinvestment plan

· The amounts under 1/7/20X3 = number of shares held at that date

Family name/Corporate name First Name DRP 1/7/20X3

Adkins Darin 78,500

Andrews Lee Y 34,000

Ball Superannuation Fund 78,900

Ballard Jeffrey Y 25,600

Barnett Jean Y 97,500

Castro Investment Pty Ltd 100,000

Crawford Israel 23,400

Erickson Karl 55,500

Foster Isaac Y 12,500

Francis Gordon Y 98,700

French Enterprise Ltd 280,700

Gonzalez International Ltd 65,000

Grant Alfonso 32,900

Gray Abel Y 11,200

Griffin William 22,000

Hale & Doug Pty ltd 65,500

Holmes May Y 121,100

Holt Harriet Y 54,000

Jensen Oriental Ltd 58,000

Jordan Dianne 87,200

Mann Sherman 22,500

Mason Leonard 8,000

Meyer Minnie Y 43,600

Montgomery Cornelius Y 58,200

Morrison Candace 69,100

Neal Faith Y 71,800

Norton Archie 85,300

Ossie Trading Ltd 325,000

Perry Ernestine 36,400

Potter Practice investments Ltd 143,600

Reid Lana Y 59,000

Salazar Trust Y 248,000

Silva Alexandra 65,400

Stephens Superannuation Fund 190,000

Stevenson Jake 28,000

Stone Glenda Y 45,200

Sutton Willie 62,500

Thompson Andrew 11,900

Todd Sara 22,200

Underwood Pty Ltd Y 127,100

Shareholders who elected to participate in the dividendreinvestment plan introduced byFML receive ordinary shares in lieu of cash for dividends. Shareholders must agree thattheir entire holding is subject to the DRP plan. Shares are issued at 96% of the closingASX share price on the day in which the dividend is declared. It is likely that a calculationof the number of shares under the DRP plan will result in a part share (ie not a wholenumber). In that event the number of shares will be rounded down to the next wholenumber. For example, a calculation which results in 12,345.78 shares will be roundeddown to 12,345. That is, that part of the share is lost. Whenever the rounding occursthat rounded down number will become the new shareholding as the basis for futuretransactions and calculations.

Other rounding conditions are:

· The principle of rounding down the number of shares (as in the DRP above)applies to any share issue.

· Also note that care needs to be taken with some calculations. When calculatingdollar amounts for dividends etc you need to do these on individual shareholdersand then aggregate those numbers for the journal entry.

· Calculations which involve share prices, should be rounded to the nearest cent(ie 2 decimal places of a dollar).

· Journal entries should be rounded to the nearest whole dollar.

The following are five events that relate to the 20X3/X4 financial year for FairweatherManufacturing Ltd (FML).

1. On the 22nd June 20X3 the company determined a final dividend of 4.0 cents perordinary share. This was declared on the 14th July 20X3 and paid three (3) daysafter the annual general meeting which was held on the 28th September 20X3.

2. On the 12th November 20X3 FML announced a bonus ordinary share issue of 1:15at an issue price of $12.00/share. The bonus issue is to be paid out of the GeneralReserve and was made on the 30th November 20X3.

3. On the 2nd January 20X4 FML declared and paid an interim dividend of 2.5 cents perordinary share.

4. The FML Board of Directors had been working on the acquisition of a rival businessand on the 16th January 20X4 received advice of acceptance of a purchase price. Tohelp fund the acquisition FML decided to raise some capital through a rights issueof ordinary shares. They formalised the rights issue at their meeting on the

28th January 20X4 where they decided to offer ordinary shareholders the rights issue on a 1:12 basis. Shareholders who accept the offer pay 85% of the share priceon the day of the Board decision. Acceptance and payment by shareholders needsto be made on the 18th February 20X4. The amount paid is based on the roundeddown number of shares issued. The following shareholders took up the offer andpaid the appropriate amounts on the required date:

Family name/Corporate name First Name

Adkins Darin

Andrews Lee

Ball Superannuation Fund

Barnett Jean

Castro Investment Pty Ltd

Crawford Israel

Erickson Karl

Foster Isaac

Francis Gordon

French Enterprise Ltd

Grant Alfonso

Gray Abel

Griffin William

Hale & Doug Pty ltd

Mann Sherman

Mason Leonard

Meyer Minnie

Norton Archie

Ossie Trading Ltd

Perry Ernestine

Potter Practice investments Ltd

Reid Lana

Salazar Trust

Silva Alexandra

Stephens Superannuation Fund

Sutton Willie

Todd Sara

Underwood Pty Ltd

5.The 20X3/X4 financial year was exceptional for FML and it decided to reward itsordinary shareholders. At the Directors meeting on the 13th June 20X4 it decided toprovide a twofold benefit. First, is a bonus share issue on a 1:25 basis issued at

$12.50 per share and funded from excess amounts in the Asset RevaluationReserve. Second, is that the meeting determined a final dividend of 5.0 cents perordinary share which is hoped to be declared sometime in July 20X4.

The following are a selection of ASX closing daily share pricesfor FML

Date Closing Share Price$ Date Closing SharePrice$

6/6/X3 $12.46 14/12/X3 $12.14

15/6/X3 $12.55 2/1/X4 $12.12

22/6/X3 $12.54 18/1/X4 $12.26

5/7/X3 $12.39 28/1/X4 $12.45

14/7/X3 $12.50 12/2/X4 $12.51

12/8/X3 $12.46 18/2/X4 $12.60

31/8/X3 $12.51 30/3/X4 $12.63

12/9/X3 $12.60 12/4/X4 $12.59

28/9/X3 $12.62 29/4/X4 $12.52

1/10/X3 $12.58 12/5/X4 $12.56

11/10/X3 $12.51 31/5/X4 $12.55

2/11/X3 $12.30 8/6/X4 $12.59

30/11/X3 $12.06 13/6/X4 $12.83

4/12/X3 $12.07 30/6/X4 $12.88

Question"

You are presented with equity information together with five separate events forFairweather Manufacturing Ltd (FML) that give rise to transaction/s. Prepare all thegeneral journal entries that arise for the period 1st July 20X3 to 30th June 20X4 only.You also need to provide supporting information (ie a working paper) for eachjournal entry. Furthermore after each of the five events provide the following:

· The number of ordinary shares on issue subject to the dividendreinvestment plan.

· The number of ordinary shares on issue which are not subject to thedividend reinvestment plan.

· The total number of ordinary shares on issue.