Olengo lewe telecoms ltd

Olengo Lewe Telcoms Ltd has an authorized share capital of Shs 20 million shares divided into 1.5 million shares of 10 each. An extract of the balance sheet as at 30^th June 2010 was as follows:

	Shs' 000	Shs' 000
Fixed Assets		10560
Current Assets
Stock	3450
Debtors	1470
Bank Balance	795
Total assets	5715
Creditors	(825)
		4890
Total net assets		15450
Financed by:
500000 ordinary shares Shs 10 par value		7500
250000 8% preference shares of Shs 30 par value		7500
Share premium		450
		15450

On July 2010, the company offered 500,000 ordinary shares for sale to the public at Shs 20 each, payable as follows:

• On application, Shs 5.
• On allotment Shs 12 including the premium.
• On first and final call Shs 3

Applications were received on 15^th July and allotment made on 31^st July and allotment made on 31 July 2010. The allotment money was received on 15^th August.

The first and final call was made on 15 September 2010 and the money was received on 30 September 2011.

The company received applications for 650,000 shares. Applications for 50,000 shares were rejected and the application money was refunded. The shares were then allocated on a prorate basis, the excess of the application money being carried forward in part satisfaction of the amounts due on allotment.

Required:

1. Prepare journal entries to record the above transactions (6 marks)
2. Prepare the ledger accounts to record the above transactions (9 marks)

A revised balance sheet to include the new issue of shares. (5 marks)