Question:

The equity of Ash Ltd on 30 June 2017 was: Share capital (issued at $4, fully paid) $1 200 000 Asset revaluation surplus 700 000 Retained earnings 400 000 The following transactions occurred during the year ended 30 June 2018. 1. 0n 1 August 2017, a 1-for-4 rights offer was made to existing shareholders. The issue price was $4 per share payable in full on allotment, and rights were transferable. Shares issued under the offer were to rank equally with existing shares as from 1 August 2017. The issue was undenNritten for a commission of $8000. The issue closed fully subscribed on 31 August, the holders of 50000 shares having transferred their rights. Directors proceeded to allotment. The undenNriting commission was paid on 7 September. . On 1 March 2018, 220 000 shares were privately placed with Blossom Investments Ltd at $4 per share. General Ledger A. (1) 2017 Aug 31 Cash Dr Share Capital Cr (Rights issue for 75 000 shares issued for $4) Sept 7 Share Issue Costs/Sha re Capital Dr Cash Cr (Payment of underwriting commission) (2) 2018 March 1 Cash Dr Share Capital Cr (Private placement of 220 000 shares at $4 each with Blossom Investments Ltd) 300 000 8 000 880 000 300 000 8 000 880 000