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QUESTION 1 On 7 November 2019, El Hadid Bhd issued a prospectus inviting...

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Accounting

QUESTION 1

On 7 November 2019, El Hadid Bhd issued a prospectus inviting subscription of shares payable in full application. The Company issued 7,000,000 ordinary shares at RM2 each. The Company also issued 700,000 preference shares at RM 3 each. The Followings are the details of share issuance transaction for the year ended 2019 :-

Date

Transaction

Total unit of shares

2 December

Received application money for ordinary shares

7,500,000

10 December

Received application money for preference shares

700,000

25 December

Shares alotted to both successful applicants ordinary shares and preference shares

Ordinary shares 7,000,000

Preference shares 700,000

30 December

Refund application money to unsuccessful applicants

500,000

31 December

Plans to raise capital through a renounceable one for eight rights issue at RM1 each to existing shareholder

General reserve of the company is RM1,200,000. Bank balance is RM300,000.

You are required to prepare the following :-

i) Journal entries for the above transaction (without narrations)(14 marks)
ii) Statement of Financial Position (Extract) as at 31 December 2019 (6 marks)

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