Question 2 (30 marks) At a meeting of the board of directors of Masiku Ltd was decided to: On 01 April 2018, to redeem the redeemable preference shares of the company. To achieve this by fresh issue of the maximum number of ordinary shares permissible without the necessity to call meeting of shareholders. The issue price for the proposed issue would be N$ 2.95 per share. After the redemption and the issue have been made that a proposal is put to the shareholders at a general meeting to increase the authorized share capital by an amount sufficient to allow capitalization issue of one ordinary share for every two ordinary shares already held at the current market price of N$ 2.20 per share. The following information is from the records of Masiku Ltd as at 01 October 2017: 1 800 000 ordinary shares 250 000 redeemable preference shares (fixed annual dividend of 12c per share) Surplus on revaluation of land Retained earnings Bank Non.current assets NS 3 520 000 500 000 750 000 1 565 000 2 380 000 4 160 000 Additional information: The redeemable preference shares at a premium of 20c per share at any time, at the option of the company, Dividends for the current year must be paid on the date of redemption. II. The authorized share capital of the company consists of: 2 000 000 ordinary shares of no par value; and . 250 000 redeemable preference shares of N$ 2 per share III. The directors have the power to issue unissued shares, until the next Annual General Meeting (AGM). iv. The company earned a profit after taxation of N$ 2 815 033 for the year ended 30 September 2018. v. Expenses related to the share issue amount N$ 21 000 You are required to: 1. Discuss whether the company may issue shares to the public. (3 marks) 2. What legal requirements should be met before the share issue? (2 marks) 3. Record the general Journal entries for the redemption and the fresh issue of shares as at 01 April 2018.(15 marks) 4. Prepare the equity and liabilities section of the statement of financial position, as at 30 September 2018. Presentation must comply with the requirement of the Companies Act and IAS 1. Show all workings separately. (7 marks) 5. Show by means of an abridged Journal entry, the effect of the director's decision on the issue of capitalization shares, should be confirmed by the shareholders