Question 1 Accounting for Equity

Grand Ltd was involved in the following transactions during 1 July 2019 to 30 June 2020 financial period. 1) On 5 November 2019 the directors of the company decided to raise extra capital by issuing 2 million ordinary shares publicly at a price of $4 each share. The company received application monies of $9,600,000 for 2.4 million shares on 30 November.

2) The company decided to allot shares to applicants on the basis of 10 shares for every 12 shares applied for on 30 December.

3) On 30 December, the excess amounts paid on application were refunded to applicants after the allotment.

4) The funds raised were transferred to the companys business account.

5) The company paid $490,000 interim dividends from prior retained earnings to ordinary shareholders on 7 February 2020.

6) The company issued 170,000 bonus shares at a price of $4 per share from General Reserve account on 30 June.

7) The company earned $1,570,000 profit during the financial year ended 30 June.

8) The company declared $640,000 final dividends on 23 August 2020.

Required: a) Provide journal entries to record the transactions during 2018/2019 financial year. (Narrations are required)

b) The choice of particular liability measurement practices will not impact on the equity. Provide your comment regarding this statement.