On 30 June 2016, the equity of Newton Limited consisted of:

25 000 ordinary shares, issued at $3, called to $2.50 $62500

1500 ordinary shares, issued at $1.50, fully paid $2250

Calls in arrears (1000 shares at 50c) (500)

General reserve 12500

Retained earnings 39500

Total equity $ 116 250

The company has recognised a liability of $10 000 in relation to 5000 8% redeemable preference shares, issued at $2 each and fully paid. These preference shares must be redeemed at a 5% premium by 31 March 2017. During the year ended 30 June 2017, the following events occurred: 1. By 31 July 2016, $300 of outstanding call money had been received. 2. On 7 August 2016 the directors forfeited those ordinary shares with calls still outstanding. The company?s constitution provides that no refund is made to the former shareholders. 3. On 17 September 2016, the final dividends (40c per share on ordinary shares and 8% on preference shares) declared on 30 June 2016 were paid. 4. On 31 December 2016, an ordinary interim cash dividend of 30c per share was declared and paid. 5. To fund the redemption of preference shares, on 16 January 2017 the directors issued a prospectus offering 12 000 ordinary shares at an issue price of $2.80, payable 70c on application, $1.40 on allotment, and 70c on a future call. The closing date for applications was 15 February 2017. The issue was underwritten by Bowes Limited for a fee of $1600, payable on 23 February 2017. 6. By 15 February 2017, applications had been received for 15 000 shares, with applicants for 3000 shares having paid the full issue price. 7. On 25 February 2017, the directors allotted 3000 shares to those applicants who had paid the full issue price per share, and 9000 shares to other applicants on a first-come first- served basis. The company?s constitution allows excess application money to be retained and used to offset other money payable. By 15 March 2017, all allotment money had been received. 8. On 31 March 2017, the preference shares were redeemed, and cheques were sent to preference shareholders on 4 April 2017. 9. Profit for the year was $3625. On 30 June 2017, the directors decided to: . transfer the general reserve balance to retained earnings . make a 1-for-6 bonus issue in lieu of a final cash dividend; the bonus shares were issued on 30 June 2017, valued at $2.70 each. Required Prepare general journal entries (including any closing entries) to record the above events. Note: Your journal entries should be recorded chronologically.

Instructions For Problem Set Tests 1. To be completed in class. Any other method of submission is not acceptable. 2. This is a CLOSED BOOK test. 3. No books, notes or mobile devices are permitted. 4. Any non-programmable calculators are permitted. At 9.00am Friday 13 May 2016 you will be given the question and paper to complete your answer(s) IN CLASS. The test will commence at the start of the class and the duration for this sitting is 30 minutes. On 30 June 2016, the equity of Newton Limited consisted of: 25 000 ordinary shares, issued at $3, called to $2.50 $62500 1500 ordinary shares, issued at $1.50, fully paid $2250 Calls in arrears (1000 shares at 50c) (500) General reserve 12500 Retained earnings 39500 Total equity $ 116 250 The company has recognised a liability of $10 000 in relation to 5000 8% redeemable preference shares, issued at $2 each and fully paid. These preference shares must be redeemed at a 5% premium by 31 March 2017. During the year ended 30 June 2017, the following events occurred: 1. By 31 July 2016, $300 of outstanding call money had been received. 2. On 7 August 2016 the directors forfeited those ordinary shares with calls still outstanding. The companys constitution provides that no refund is made to the former shareholders. 3. On 17 September 2016, the final dividends (40c per share on ordinary shares and 8% on preference shares) declared on 30 June 2016 were paid. 4. On 31 December 2016, an ordinary interim cash dividend of 30c per share was declared and paid. 5. To fund the redemption of preference shares, on 16 January 2017 the directors issued a prospectus offering 12 000 ordinary shares at an issue price of $2.80, payable 70c on application, $1.40 on allotment, and 70c on a future call. The closing date for applications was 15 February 2017. The issue was underwritten by Bowes Limited for a fee of $1600, payable on 23 February 2017. 6. By 15 February 2017, applications had been received for 15 000 shares, with applicants for 3000 shares having paid the full issue price. 7. On 25 February 2017, the directors allotted 3000 shares to those applicants who had paid the full issue price per share, and 9000 shares to other applicants on a first-come first- served basis. The companys constitution allows excess application money to be retained and used to offset other money payable. By 15 March 2017, all allotment money had been received. 8. On 31 March 2017, the preference shares were redeemed, and cheques were sent to preference shareholders on 4 April 2017. 9. Profit for the year was $3625. On 30 June 2017, the directors decided to: . transfer the general reserve balance to retained earnings . make a 1-for-6 bonus issue in lieu of a final cash dividend; the bonus shares were issued on 30 June 2017, valued at $2.70 each. Required Prepare general journal entries (including any closing entries) to record the above events. Note: Your journal entries should be recorded chronologically