Problem - Share issues and dividends
At 30 June 2016, Box Hill Ltd's equity was as follows:
Issued capital:
400 000 ordinary shares issued at $1.20, fully paid $480 000
80 000 7% preference shares issued at $1, fully paid 80 000
Retained earnings 560,000
General reserve 348 000
Total equity 70 000
$978 000
The preference shares were non-participating. The following events occurred after 30 June 2016:
2016
Sept. 1 Final dividends out of retained earnings, as recommended in June, were paid in cash. This included the 7% preference dividend for the year ended 30 June 2016 and a final ordinary dividend of 10c per share.
Oct. 15 A prospectus was issued inviting subscriptions for 100 000 ordinary shares at an issue price of $1.40, payable 80 cents on application and 60 cents on allotment.
Nov. 18 Applications closed, with applications having been received for 100 000 shares. Applicants for 8000 shares had paid in full on application.
Nov. 20 Shares applied for were allotted, with excess application money being applied to allotment.
Dec. 11 The balance of allotment money due was received.
Dec. 31 In order to keep cash in the company to meet its ever-increasing need for liquidity, the directors decided not to pay an interim cash dividend. Instead, they made a bonus issue from the general reserve of one ordinary share (valued at $1.20) for every 10 ordinary shares held.
2017
June 20 The directors paid the preference dividend for the year
June 30 The directors recommended a final dividend of 12c per ordinary share.
Required - Prepare the journal entries (in general journal form) necessary to record the above events in Box Hill Ltd's accounting records.