The equity of Cuneiform Ltd on 30 June 2012 was:
280 000 ordinary shares issued at $2.40
$ 672 000
General reserve
290 000
Retained earnings
53 780
$1 015 780
Equity Receivable (24 000 shares @ 80c) $19 200
The company has a 30 June balance date.
The following transactions occurred during 2012 and 2013:
2012
On 15 July, the directors forfeited the shares on which the call was outstanding. Forfeited shares are
not to be reissued and the companyâs constitution requires that any forfeited amounts be refunded
to the former shareholders. Refund cheques were sent on 26 July.
On 1 August, a rights offer (offering 5% p.a. preference shares at an issue price of $2.80 per share)
was made to existing shareholders on the basis of one preference share for every two ordinary
shares held. Shares were payable in full on allotment and rights were renounceable. The issue was
underwritten for a fee of $5 000.
The rights offer closed undersubscribed on 31 August, and rights in respect of the remaining 40 000
ordinary shares were transferred to the underwriter. On 1 September, all of the shares were allotted.
The underwriter paid for its allotment of shares, net of its fee, on 10 September.
2013
On 2 January, the directors declared and paid an ordinary interim share dividend of one ordinary
share, valued at $3, for every four ordinary shares held. The dividend was funded from general
reserves.
REQUIRED:
a) Prepare the journal entries to record the above transactions for 2012 and 2013. Show dates, and
show your workings.
b) Show the equity section of the Statement of Financial Position of Cuneiform Ltd as at 31 January
2013.