Pyke Franchises Ltd equity section of its Balance Sheet as at 30^th June 20X5 presents as follows:

EQUITY $ 000s

Share Capital

Ordinary shares paid to $5.00 48,000

8% $10.00 Preference shares 12,000

Reserves

Foreign exchange translation 2,564

Asset revaluation surplus 4,560

Retained Profits 6,732

TOTAL EQUITY 73,856

The Preference shares are non-participating. Share issue costs of $2,000,000 have been offset against the Ordinary share capital.

The company wishes to raise further capital and decides to offer existing Ordinary shareholders with the opportunity to invest further in the company. As a result a renounceable Rights issue is made to those shareholders of 1 share for every 10 held at an exercise price of $5.00/share payable in full at the exercise date of 31^st October 20X5. There are no costs associated with this Rights issue.

As at 31^st October 20X5 the required money had been received from 85% of shareholders. The remaining shareholders decided not to take up the offer.

REQUIRED

Prepare general journal entry/s with narrations to record the transactions resulting from the Rights issue. Show any calculations you consider relevant.