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:
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:
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.
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The 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.