Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Lemon Tea Berhad has an authorised capital of 2,000,000 ordinary shares of RMI each. Below is the extract of Statement of Financial Position of the
Lemon Tea Berhad has an authorised capital of 2,000,000 ordinary shares of RMI each. Below is the extract of Statement of Financial Position of the company as at 1 January 2016: RM Equity Ordinary share capital 800,000 Share premium 60,000 Retained earnings 108,500 The following transactions occurred in 2016 but have not been recorded: 3) On 1 January 2016, the company issued 6% RM80,000 par value bonds payable for RM73,612. The bonds pay interest on 31 December annually and will matures in five years. The annual market rate on the date of issue is 8%. The company issued a prospectus to the public to invite for subscription of 300,000 ordinary shares at a value of RM2.50 each. All shares were fully subscribed and payable in full upon application. The costs of share issue is RM22,000. In July 2016, the company paid interim dividend of RM50,000. Issued bonus shares at par, at a ratio of one for every ten shares held. The share premium account is utilised for this purpose. At the end of the year, the board of directors declared a final dividend of RM65,000. The dividend will be distributed to shareholders in March 2017, subject to approval in the forthcoming annual general meeting to be held in February 2017 On 31 December 2016, the company paid interest to its bondholders. in Juiy 4) 6) Required: 1. Journalise the above transactions (Narrations are not required). Where no entries are required, state your justification. (9.5 marks) 11. Prepare the equity and non-current liabilities sections of Statement of Financial Position of Lemon Tea Berhad as at 31 December 2016. (3.5 marks) ill. Explain why redeemable preference shares is classified as a liability instrument instead of an equity instrument
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started