Question

Exercise 13.20 Options, shares, dividends, reserves The statement of changes in equity for Salmon Ltd for the year ended 30 June 2020 was as shown below. SALMON LTD Statement of changes in equity for the year ended 30 June 2020 $ 69 420 $ 69 420 $300 000 80000 2500) 222 000 170 000 20000 $779 500 $ 24000 20 000 14000 Profit for the year Other comprehensive income Total comprehensive Income for the year Movements in equity for the year ended 30 June 2020 were: Share capital Balance at 1 July 2019 Issue of 40000 ordinary shares @ $2.00 Share issue costs public issue Issue of 80 000 ordinary shares @ $2.00 to public Issue of 50 000 ordinary shares o $3.00 on exercise of options costing 40c Calls in advance on issue of 80 000 shares @ $2.90 to public Balance at 30 June 2020 Options Balance at 1 July 2019 Transfer to share capital on exercise Transfer to reserve on lapse Balance at 30 June 2020 General reserve Balance 1 2019 Bonus of shares Transfer from retained earnings Balance at 30 June 2020 Options reserve Balance at 1 July 2010 Transfer of lapoed options Balance at 30 June 2020 Retained earnings Balance at 1 July 2019 Dividends declared Dividends paid Transfer to general reserve Profit for the period Balance at 30 June 2020 $110000 (80000 30 000 $ 60000 4000 4000 $ $75 000 18000 00000 $102 420 Required Provide journal entries in relation to: 1. issue of shares on exercise of options, and related transfers to/from reserves 2. issue of shares to public 3. dividends 4. movements in general reserve. Note: None of the entries should contain the account Retained Earnings. (LO6 and LO8)

Answer 1

Sr No	Account	Debit	Credit
1	Cash (50000 * 3)	150000
	Share capital		150000
	Options	24000
	Share capital (50000 * 0.4)		20000
	Lapsed option reserve (10000 * 0.4)		4000
2	Cash trust [(80000 * 2.9) + 20000]	252000
	Application		252000
	Application (80000 * 2.9)	232000
	Share capital		232000
	Application	20000
	Calls in advance		20000
	Cash	252000
	Cash Trust		252000
	Share capital	2500
	Cash		2500
3	Dividend declared	8000
	Dividend payable		8000
	Dividend paid	4000
	Cash		4000
4	Transfer to general reserve	30000
	General reserve		30000
	General reserve	80000
	Share capital		80000