AFE3691 ASSIGNMENT 2 QUESTION 1 (31 Marks) On 30 April 2020, Emilia Ltd had these balances in their records: 700 000 300 000 45 000 150 000 ordinary shares at no par value 5% Redeemable cumulative preference shares at N$2,00 each Share premium account Capital redemption reserve fund Retained earnings Bank overdraft Preliminary expenses Dividend Payable Underwriters' commission (on ordinary shares) Inventory Property Equipment Accounts receivables Accounts Payables 50 000 258 000 105 350 15 000 15 000 20 000 26 350 1 450 000 755 600 545 650 368 000 The authorised share capital of the company is: 250 000 ordinary shares at no par value. 200 000 5% redeemable cumulative preference shares @ N$2,00 each. 150 000 8% redeemable preference shares at N$2,00 each. The directors have the power to issue un-issued shares and both redeemable preference shares are redeemed at the option of the company. On 15 May 2020, at a meeting of the directors of Emilia Ltd it was decided that on 01 July 2020, to redeem the 5% redeemable cumulative preference shares at a 10% premium and finance this redemption as follows: 1. A fresh issue of 100 000 8% redeemable preference shares at an issue price at N$2,25/share. This offer was over-subscribed by one and a half Page 21 of 25 FACULTY OF COMMERCE, MANAGEMENT AND LAW times with unsuccessful applicants being refunded. 2. The balance is to be provided for out of retained earnings. Additional information: (0) Dividend pertaining to preference shareholders have not been paid since 30 April 2019, as the company incurred operating losses up to the commencement of the present financial year. (ii) To write off all preliminary expenditure and underwriters' commission in the Accounting records immediately after the issue of the 8% redeemable preference shares. (iii) Expenses related to the share issue amount to N$7 000 and premium on redemption were to be written off to share premium. (iv) Profit for the period is N$ 950 650. (v) Income tax is payable at 30%. You are required to: 1.1 Prepare the General Journal entries for Emilia Ltd to record the above transactions. (Narrations are not required.) (17 Marks) 1.2 Prepare the statement of changes in equity for the year ended 30 April 2021. (14 Marks)