No. 5(b): Preparation of journal entries to record the issuance of the remaining ordinary shares and preference shares and the redemption of some of the debentures: Workings:
2. The remaining balance of preference shares = Authorized preference share capital – Issued preference share capital, i.e. 100,000 – 83,000 = 17,000 shares. There is no premium on the preference shares as they were issued at their par value of $1. Below are the journal entries to record the transactions of Aries Limited that took place on 1st April, 2011. No. 5(c): Preparation of the Appropriation Account for Aries Limited for the year ended 31st May, 2011: Workings:
Below is the Appropriation Account of Aries Limited for the year ended 31st May, 2011. Note: Debenture interest is an expense and therefore not an appropriation of profit, hence it doesn’t appear as a line item in the Appropriation Account. I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to make your comments below. Good Luck!
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AuthorThe author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor. Archives
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