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P 1 8 - 2 Tabby Limited was incorporated on 1 5 February 2 0 X 6 with an authorised capital of C 1 5

P18-2
Tabby Limited was incorporated on 15 February 20X6 with an authorised capital of
C1500000 consisting of 1000000 ordinary shares and 5000008% non-redeemable
preference shares
In March 20X6 the directors issued:
100000 ordinary shares to the incorporators for C1 each
600000 ordinary shares to the public for C1,20 each
200000 preference shares for C1 each
The closing date for all applications was 25 April 20X6.
The entire issue was underwritten by Felix Bank Limited for a commission of 2% of the
issue price. The incorporators paid for their shares on 8 April 20X6. Applications were
received from the public as follows:
Ordinary shares -1500000 shares
Preference shares -150000 shares
All the required application amounts were received by 25 April 20X6.
On 30 April 20X6 the directors decided:
To allot the preference shares in accordance with the applications.
In the case of ordinary shares:
To allot all applications in the ratio of two shares for every five shares applied for
To refund all excess application amounts on 1 May 20X6.
Settlement with the underwriters took place on 3 May 20X6.
The company's accounting policy is to set off share transaction costs against share capital.
Profits for the period ended 30 September 20X6 amounted to C150000. Total dividends of
C20000 were declared on 30 September 20X6. None of the shareholders were exempt
from the 20% dividends tax.
You are required to:
a. Record all the above transactions in the journal of Tabby Limited.
b. Prepare the equity section of the statement of financial position of Tabby Limited at
30 September 20X6.
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