You are required to advise the management of the respective companies on how ro

Question

You are required to advise the management of the respective companies on how ro prepare the necessary journal entries (including narratives) to record each of the fokkowing transactions for the year 2015:

I. As-Sakinah Bhd. On 10 August 2015, the directors of the company resolved to forfeit all the shares whose instalment payments of 20 sen each were still outstanding. Two months later, half of the forfeited shares were reissued as partly paid at 70 sen each while the remaining shares were carried forward to next year. On December 2015, the company made a call for the payments of the final instalment and at the year end, all the payments due had been duly received from the shareholders. The following the information extracted from the Statement of Financial Position of As- Sakinah Bhd. as at 1 August 2015. Authorised capital RM 5,000,000 Ordinary Shares of RM1 each 5,000,000 Issues and paid up capital 2,500,000 Ordinary Shares of RMI each, called up to 60 sen Less: Call in arrears 1,500,000 (2,000) 1,498,000 (8 marks)

Explanation / Answer

1. Share capital /stock A/c dr 6000

To share forfeiturea/c. 4000

To unpaid call a/c. 2000

(Being 10000 shares forfeited)

No of shares forfeited =2000/0.2 = 10000

Bank a/c 3500

Share forfeiture a/c dr. 1500

To share capital a/c 5000

(Being shares forfeited re-issued)

Share forfeited a/c dr. 2500

To capital reserve. 2500

(Being share forfeited ac transferred to capital reserve)

2. Banka/c dr 50000

To debentures. 50000

(Being debenture issued )

Interest a/c dr 6000

To profit and loss a/c. 6000

(Being interest charged to profit and loss a/c

Bank a/c. Dr. 15250

To sinking fund investment a/c. 14750

To sinking fund a/c. 500

Debenture a/c dr. 15000

Interest a/c. Dr. 450

To bank. 13800

To capital reserve. 1650

( Being profit on redemption transferred to capital reserve)

Interest = 15000*3/12*.12 = 450

Sinking fund a/c dr. 15000

To general reserve. 15000

(Being sinking fund transferred to reserves)

3. Banka/c dr. 10000000

To Convertible loan a/c. 10000000

(Being loan taken)

Convertable loan a/c. Dr. 10000000

To share capital / stock. 2500000

To bank. A/c. 5000000

To share premium. 2500000

(Being loan account converted and loan account repaid)

  

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