Question 1 (15 marks: 27 minutes) On 1 January 20x0, the company was incorporated with an authorised share capital of 150 000 ordinary shares and 50 000 preference shares (fixed annual dividend of 10c/share). The post closing trial balance of Coral Limited as at December 20x2 after the provisional statement of profit or loss & other comprehensive income was drafted is shown. Coral Limited POST-CLOSING TRIAL BALANCE AS AT 31 DECEMBER 20x2 Details Fol. Debit Credit Ordinary share capital (100 000 shares @R1 each B1 100 000 00 Ordinary share premium B2 5 000 00 Retained earnings B3 43 000 00 Preference share capital (40 000 preference shares @R1 Each B4 40 000 00 Land and buildings B5 100 000 00 Plant and Machinery B6 60 000 00 Underwriting commission Preference shares B7 4 000 00 Share issue expenses preference shares B8 2 000 00 Bank B9 22 000 00 188 000 00 188 000 00 Additional information The directors decided, with the necessary general meeting approval, to implement these decision on 1 January 20x3 in this order: 1) The authorised share capital must be converted to 150 000 ordinary shares @ no par value. 2) The preference shares are to be redeemed at a premium of 5c/share. 3) The redemption of the preference shares must be financed partly from the issue of 10 000 ordinary shares @R2/share and partly out of the current bank balance. 4) The ordinary share were offered to the public. a. The issue was underwritten in full by Down Under Ltd for an underwriting commission of 6% b. The public subscribed for 8 000 shares. c. All the shares were allotted on January 20x3. d. Share issue expenses amounted to R500. Page 16 of 21 5) The directors wish to write of all commission and share issue expenses immediately after the redemption of the preference shares. 6) Subsequent to the above transactions, there must be a capitalisation issue of one ordinary share for every eight already held at the current market price of R2,00 per share. You are required to: 1. Show the general journal entries for the decision on 01 January 20x3. (15 marks)