Problem 2

1. Prepare journal entries for each of the following transactions:

a) In September 2014, ABC Ltd issued a prospectus offering 500 000 shares at $3.00 per share with $2 payable at the time of application, $0.50 payable on allotment and $0.50 on call. On 15 October, the directors allotted 500 000 shares to subscribers. The call was receivable on 15 November 2014 and all amounts due were collected. No narrations required.

b) Prepare the shareholders' equity section of the balance sheet at 15 November 2014 for ABC Ltd to demonstrate the disclosure of equity transactions (from part (a) or (b)).Assume retained profits are $100 000 and there are no other reserves