Share issues, options, statement of changes in equity LO6, 8, 9

On 30 June 2022, the equity accounts of Yabby Ltd consisted of the following.

180 000 ordinary shares, issued at $2.50 each, fully paid $450 000

Options (80 000 at 75c each)* 60 000

General reserve 50 000

Forfeited shares reserve 4 000

Retained earnings 95 000

*The options were exercisable between 1 May 2023 and 31 May 2023. Each option

allowed the holder to buy one ordinary share for $3 each.

Required

1. Prepare general journal entries, including any closing entries required, to record the following

transactions that occurred during the year ended 30 June 2023.

The final 6c per share dividend for the year ended 30 June 2022 was paid on 27 September

2022. Shareholder approval to pay the dividend had been obtained at the annual general

meeting on 20 September.

On 1 October, the directors issued a prospectus offering 60 000 ordinary shares at an issue

price of $2.80, payable $2 on application and 80c as a future call. The closing date for

application was 31 October 2022. The share issue was underwritten by Support Stockbrokers

for a fee of $5000, payable on 15 November 2022.

By 31 October 2022, applications for 75 000 shares had been received.

On 5 November 2022, the directors allotted the shares pro rata, with applicants receiving 80%

of their requested shares. The companys constitution allows excess application monies to be

retained and used to offset future calls payable.

On 15 November 2022, the underwriting fee was paid.

On 31 December 2022, the directors announced an interim dividend of 3c per share payable

in cash on 1 February.

To raise funds for expansion, the directors sold a parcel of 65 000 ordinary shares to Iron Jays

Finance on 28 April 2023 at an issue price of $2.80 per share.

By 31 May 2023, the holders of 65 000 options had indicated that they wished to purchase

shares. On 2 June 2023, 65 000 ordinary shares were issued with monies being payable by

21 June. Options not exercised duly lapsed.

All outstanding monies were received with respect to shares issued to option holders.

Profit for the year was $152 380. On 30 June 2023, the directors decided to:

transfer $40 000 to the general reserve

declare a final 10c per share dividend. Shareholder approval for this dividend will be sought

at the annual general meeting in September 2023.