Question 1: Shares

Milestone Ltd’s equity at 30 June 2019 was as follows:


400 000 ordinary shares, issued at $1.60, fully paid                                $ 640 000

500 000 ordinary shares, issued at $2, called to $1.20                                600 000

180 000 redeemable preference shares, issued at $1, fully paid                180 000

Calls in advance (10 000 ordinary shares)                                                       8 000

Share issue costs                                                                                            (7 000)

General reserve                                                                                             60 000

Retained earnings                                                                                         310 000


The following events occurred during the year ended 30 June 2020:


     July 15 The final call, due 31 August, was made on the partly paid shares.
     Aug. 31 All call money was received, except for that due on 24 000 shares.
     Sept. 10 In accordance with the constitution, the shares on which the call was  unpaid were forfeited. The company is entitled to keep any balance from forfeiture of shares.
     Oct. 1 The company offered ordinary shareholders 1 option (at a price of 80  cents per option) for every 5 shares held. Each option entitled the holder to buy 1 ordinary share at a price of $1.50 per share, exercisable on or before 15 April 2020.
31 70 000 options were taken up by shareholders, for which all money  due was received.
     Jan. 3 A prospectus was issued, inviting applications for 100 000 ordinary  shares at an issue price of $2, payable in full on application. The purpose of the issue was to fund the redemption of the preference shares. The issue was underwritten at a commission of $6700.
31 The issue closed fully subscribed, with all money due having been  received.
     Feb. 5 The 100 000 shares were allotted, and the underwriting commission  was paid.
18 The directors resolved to redeem the preference shares out of the  proceeds of the January share issue for $1.06 per share.
26 Cheques were issued to the preference shareholders.
     April 15 52 000 shares were issued as a result of 52 000 options having been  exercised, for which money had been received. The unexercised options lapsed.



Prepare general journal entries to record the above transactions.


Question 2: Shares    

The equity of Foresters Ltd at 30 June 2019 consisted of:


Share capital:

200 000 10% cumulative pref. shares issued at $2, fully paid

100 000 ordinary shares issued at $1, paid to 50c

General reserve

Retained earnings


$400 000 50 000

40 000

860 000


The following transactions occurred during the year ended 30 June 2020:









Already deducted from the retained earnings balance of $860 000 were final ordinary dividends of $7000 and preference dividends of $40 000 that had been declared at 30 June 2019. These dividends were expected to be paid later in 2019.

July 9 Final call made on 100 000 partly paid ordinary shares.
Sept. 19


Call money received.
Oct. 5




Final dividends paid.

Revaluation of an item of land upwards by $50 000. (This is the initial revaluation of land. Ignore taxation.)

With the surplus created from the revaluation of land, the directors made a bonus issue of ordinary shares to existing ordinary shareholders, on the basis of 3 shares for every 10 shares, valued at $1.08 per share.








Interim dividend of 6c per ordinary share paid out of retained earnings. Preference dividend for the year and final ordinary dividend of 6c per share were declared. Transfer of $3000 to the general reserve from retained earnings.


Prepare ledger accounts to reflect the above transactions.

Click on Buy Solution and make payment. All prices shown above are in USD. Payment supported in all currencies. Price shown above includes the solution of all questions mentioned on this page. Please note that our prices are fixed (do not bargain).

After making payment, solution is available instantly.Solution is available either in Word or Excel format unless otherwise specified.

If your question is slightly different from the above question, please contact us at with your version of question.