Question

Journalising company transactions and preparing the shareholders’ equity section of the balance sheet

B-Mobile Wireless needed additional capital to expand, so the business incorporated. B-Mobile Ltd then completed the following transactions:

Oct 2   Issued 19,000 ordinary shares for equipment with market value $110,000

Oct 9   Received applications for 15,000 ordinary shares at a total issue price of $6 per share, each accompanied by an initial payment of 25% of the issue price, and allotted all 15,000 shares to these applicants

Oct 12Issued 8,000 preference shares to acquire a patent with a market value of $80,000

Oct 28Made a call on the partly paid ordinary shares of a further $3 per share. The call was paid in full

Requirements

1.  Record the transactions in the general journal.

2.  Prepare the shareholders equity section of the B-Mobile balance sheet at 31 October. The ending balance of Retained Earnings is $46,000

Answer 1

Solution:

1)

Date	Particulars	Debit	Credit
Oct-02	Equipment	110,000
	Ordinary share capital		110,000
Oct-09	Cash (Trust bank account)	22,500
	Application		22,500
Oct-09	Application	22,500
	Allotment	22,500
	Ordinary share capital		55,000
Oct-09	Cash	22,500
	Cash (Trust bank account)		22,500
Oct-09	Cash	22,500
	Allotment		22,500
Oct-12	Patent	80,000
	Preference share capital		80,000
Oct-28	Call ($3x15,000)	45,000
	Ordinary share capital		45,000
Oct-28	Cash	45,000
	Call		45,000

　

2)

Share Capital
15,000 ordinary shares, fully paid	$90,000
8,000 preference shares, authorized	$80,000
Total share capital	$170,000
Retained earnings	$46,000
Total shareholders’ equity	$216,000