QUESTION 6 (15 Marks)

(a) On 1 July 2019, Suria Berhad had outstanding 30,000,000 ordinary shares of RM2.90 fair value each. The balance of the fair value reserve and retained profits accounts on that date were RM7,800,000 and RM36,500,000 respectively. During the year, the company engaged in the following share transactions:

1. Reacquired 2,000,000 shares of its ordinary shares for RM3.50 per share.

2. Reissued 1,100,000 shares of the treasury shares for RM4.10 per share.

3. Reissued 400,000 shares of the treasury shares for RM2.50 per share.

4. Cancel the remaining 500,000 shares purchased using the share retirement method.

Required:

Prepare journal entries to record the above transactions. (10 Marks)

(b) The capital structure of a Denai Bhd consists of 1,500,000 contributed ordinary share capital priced at RM2.50 each and 90,000 8% redeemable preference shares valued at RM1.20 each, as at 30 June 2020. The retained profits of Denai Bhd as that date is RM450,000. All preference shares are to be redeemed at its current value and for the purpose of redemption, the Directors are empowered to make fresh issue of ordinary shares at its current price after utilising the retained profits, subject to condition that a sum of RM60,000 shall be retained in the retained profits and which should not be utlised.

Required:

Prepare an extract of the statement of financial position immediately after the redemption. (5 Marks)