Sedunia Berhad was incorporated on 1 July 2020. On 1 August, it decided to issue 300,000 ordinary shares on the following terms: Application RM1 per share Allotment RM2 per share Call as required RM1 per share To the end of August, applications for 350,000 shares had been received together with the application money due on each share. One applicant for 5,000 shares had forwarded RM20,000 in full payment of the shares. On 15 September, the directors proceeded to allot 300,000 ordinary shares on the following basis. Applicants for 30,000 shares were refunded their application money in full, 5,000 shares were allotted to the applicant who paid for the shares in full, and the other successful applicants were allotted the remaining shares, excess application money being transferred to allotment. On 7 October, all allotment money had been received. A first and final call was made on 1 November, and all call money was received by 30 November with the exception of the amount due on 6,000 shares. Required: (a) Prepare journal entries to record the above transactions. Narrations are required. (b) (30 marks) Explain what is meant by oversubscription and the measures that a company can take under this situation. (10 marks) Required: a. Calculate the following ratio for 2020: i. Current ratio ii. Quick ratio iii. Asset turnover iv. Profit margin v. Earnings per share vi. Rate of return on total assets Industry average ratio 2.3:1 1.1 : 1 2.0 4.0% RM0.46 11.0% Assumption: all sales in credit; finance expense means interest; ordinary share outstanding throughout both years = 10,000,000 shares. (6 marks) b. From the industry average, identify and comment on Tanaka Bhd's profitability and short- term liquidity. (9 marks) 5 Tanaka Bhd Statement of Financial Position as at 31 December 2020 2019 Non-current assets Furniture (Net book value) Current assets RM'000 RM'000 31,840 29,200 Cash at bank Inventory Accounts receivable 2,448 3,520 13,000 13,200 7,600 7,000 Quoted shares 600 500 23,648 24,220 Current liabilities Accounts payable 10,400 10,920 Accruals 300 500 10,700 11,420 Working capital 12,948 12,800 Non-current liabilities Long term loan 18,400 18,000 Net assets 26,388 24,000 Shareholder's equity 14.4 million ordinary shares 14,400 14,400 500,000 9% preference share 1,000 1,000 Retained profits 10,988 8,600 26,388 24,000 Question 4 The following information is taken from Tanaka Bhd for the year ended 31 December 2020. Preference dividend declared and fully paid in 2020: RM100.000 Ordinary dividend declared and fully paid in 2020: RM3,960,000 Preference share marketable price per unit at 31 December 2020: RM4.60 Ordinary share marketable price per unit at 31 December 2020: RM9.00 Tanaka Bhd Statement of Comprehensive Income for the year ended 31 December 2020 RM'000 Sales 100,000 Less: Cost of sales (65,000) Gross profit 35,000 Less: Expenses Marketing expenses (13,000) Administration expenses (9,200) Finance expenses (2,880) (25,080) Operating profit before tax 9.920 Taxation Operating profit after tax (3,472) 6,448