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hi there please i need help with me question please see the attachment thanks 1 Q7 The contributed equity of Logan Dairy Limited as at

hi there

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please see the attachment

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image text in transcribed 1 Q7 The contributed equity of Logan Dairy Limited as at 1 st January 2016 was $2,000,000 consisting of 1,000,000 ordinary shares issued at a price of $2 per ordinary share. The balance in the bank ledger account as at 1st January 2016 was $500,000 On 1st July 2016, Logan Dairy Limited issued a prospectus inviting the public to subscribe for 7,500,000 ordinary shares at an issue price of $4 for each ordinary share. The terms of the share issue are that the issue price is to be settled $1 on application, $2 on allotment and the balance on a call. The expenses related to the share issue were: advertising of share issue and prospectus $60,000; accounting fees associated with drafting of prospectus $10,000; legal expenses associated with share issue $20,000; brokerage fees $100,000; overheads allocated $36,000; feasibility study $58,000. These expenses were paid on 15th July 2016. Applications were received for 8,500,000 ordinary shares and all application money was received by 20th July 2016. The company allotted the 7,500,000 ordinary shares on 1 st August 2016 on a pro-rata basis and the excess received on application was used to settle the amount due on allotment. The balance of amount payable on allotment was received by the due date 14th August 2016. The company made a call for the balance of the issue price on 3 September 2016. Amounts due on the call were received for 7,400,000 ordinary shares by the due date 17 th September 2016. A shareholder who was allotted 100,000 ordinary shares failed to settle the call money. On 10th October 2016 the management of the company decided to forfeit the 100,000 ordinary shares from the defaulting shareholder. The forfeited shares were reissued on 20 th October 2016 at a price of $3.70 per share to be paid for in full on application. The reissued shares were taken up by a shareholder who paid for the shares on the due date 30th October 2016. On 15th November 2016, the company refunded the amount paid by the defaulting shareholder after charging a penalty for the difference between the original issue price and the reissue price. On 1st December 2016 the company purchased 100 hectares of farmland in Morinsville from King Country Farms Limited. The market value of the farmland as at 1 st December 2016 was $5,000,000. The company issued ordinary shares 1,400,000 to King Country Farms Limited as purchase consideration for the acquisition for the farmland. The market value of the ordinary shares at time of issue was $3.50. On 31st March 2017, Thames Valley Limited decided to repurchase 1,500,000 ordinary shares that were originally issued at a price of $4. The repurchase price was $4.80 and the repurchased shares were cancelled on repurchase. Required: (a) Prepare journal entries (without narrations) to record all transactions for the year ended 31st December 2016. (b) Provide two possible reasons why Logan Dairy Limited decided to repurchase the shares from King Country Farms Limited (c) Briefly explain why Logan Dairy Limited must satisfy the solvency test. Explain how 1 2 the company can satisfy the solvency test. (d) Prepare journal entries (without narrations) to record the repurchase of the ordinary shares on 31st March 2017. (e) Prepare the contributed equity (or issued share capital) ledger account for Logan Dairy Limited to record all balances and transactions from 1 st January 2016 to 31st March 2017 assuming that there were no other transactions besides those provided in the question. Balance the contributed equity ledger account for each of accounting year ended 31st December 2016 and 31st December 2017. (f) Prepare the bank ledger account for Logan Dairy Limited to record all balances and transactions from 1st January 2016 to 31st March 2017 assuming that there were no other transactions besides those provided in the question. Balance the bank ledger account for each of accounting year ended 31st December 2016 and 31st December 2017. Q8 On 1st July 2016, Canterbury Finance Limited issued a prospectus inviting the public to subscribe for 10,000,000 ordinary shares at an issue price of $5 for each ordinary share. The terms of the share issue are that the issue price is to be settled $2 on application, $2 on allotment and the balance on a call. The expenses related to the share issue were; advertising of share issue and prospectus $25,000; accounting fees associated with drafting of prospectus $10,000; legal expenses associated with share issue $15,000; brokerage fees $100,000; and feasibility study $25,000. These expenses were paid on 15th July 2016. Applications were received for 11,000,000 ordinary shares and all application money was received by the due date, 20th July 2016. The company allotted the 10,000,000 ordinary shares on 1st August 2016 on a pro-rata basis. The excess of application money was used to settle partly the amount due on allotment. The balance of the amounts due on allotment was received by the due date 14th August 2016. The company made a call for the balance of the issue price on 3 rd September 2016. All amounts due on call were received by the due date 17th September 2016. On 1st July 2016, Canterbury Finance has an opening credit balance of $25,000 in the bank account. Required: Prepare the following ledger accounts to record the above transactions: (a) Contributed Equity Account (b) Bank Account 2

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