DPA30053

QUESTION 5:

Mahligai Corporation was registered with 200,000 10% preference shares of RM1.00 each and
500,000 ordinary shares of RM1.00 each, invited application for its first issue of 200,000 ordinary
shares of RM 1.20 each on the following terms:

On RM 0.20
application
On allotment RM0.40
RM0.30
On 1st call RM0.30

On 2nd call

Applications were received for 300,000 ordinary shares. The directors rejected applications for
50,000 shares and allotted the shares on a pro-rata basis among the remaining applicants. Any
surplus money on application was used to pay up on allotment.

All monies due to the allotment and calls on the ordinary shares were duly received.
You are required to prepare:
a. Journal entries to record the above transactions.
b. Statement of Financial Position (extract) as at 31 December 2018

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QUESTION 6:
Merdeka Company Ltd has 100,000 units ordinary shares issued at RM6.50 per share. Applicants
are required to pay when the application is RM2.00 per share, RM2.50 during the allotment,
RM1.50 during first call of and RM0.50 per share on last call.
260,000 units were applied and 110,000 units of shares application monies refunded. The
Company has decided to allot 2 shares for 3 shares applied for. Total surplus of application monies
will be taken to allotment.
Mr Heng was shareholders amounted to 15,000 units failed to pay the first and second call.
Meanwhile, Mr. Seng was the holder of 5,000 shares has failed to pay a second call. After expiry
of the grace period, the company decided to dispose of the shares allocated to them.
Shares have been disposed of is reissued with 15,000 units offered to Cik Siti price at RM3.50 per
unit and 5,000 units offered to Mr. Kay at a price of RM 3.00 per unit. Both of them have accepted
the offer and pay the price of the shares offered.
Show how these transactions are recorded in the company.
(Prepare journals and the Statement of Financial Position until reissued)

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QUESTION 7:

Blackcherry Ltd has an authorized capital of RM150, 000 divided into 150,000 ordinary shares of
RM1.00 each. The company publishes all its shares at a price RM1.20 per share payable as follows:

On application 0.30
On Allotment 0.50
On 1st and 2nd Call 0.40

Applications were received for 250,000 and decided that the 50,000 shares applied for is not
successful. For the remaining surplus of the remaining 200,000 shares, the directors have decided
to give a full allotment to the applicants for 50,000 shares and the remaining shares allotment were
pro-rata among the other applicants. All surplus money for the successful applicant is not returned,
but is used as part payment of the amount due on allotment.

A shareholder does not pay the amount owed on the 500 call and of its shares are forfeited by the
directors. Forfeited shares reissued to Strawberry Ltd at RM0.60.

Prepare journal entries and Statement of Financial Position for Blackcherry Ltd

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QUESTION 8:

Red Ltd has an authorized capital of RM100, 000 divided into 100,000 ordinary shares of RM1.00
each. All shares were issued at RM1.00, with payments made as follows:

On application 0.10
On allotments 0.30
The first call 0.40
The second call 0.20

Applications were received for 200,000 shares and the directors have decided to refund the
application for 50,000 shares. The remaining applicants, the application allocated to the two
shares for every three shares applied for. Surplus funds applications submitted by the successful
applicants were not returned, but was offset by the allotment money due.

Calls have been paid in full unless a shareholder who fails to pay all the two calls to 1,000 of its
shares. Another shareholder pays his first call, but do not pay a second call to the 1.000 of its shares.

Directors has decided to take their shares and then reissued to Mr. X at a price of RM0.70 per
share.

You are required to:

Show the journal entry in the company to record the above transactions and Statement
of Financial Position after the first call is made.

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QUESTION 9:

Success Company Ltd is a construction company in Seremban. At the end of 2019, the company
has offered a new industrial area construction projects by local authorities. To ensure the project
runs smoothly, the company requires additional financial resources and decided to offer the new
shares issued. The offer is related to 300,000 units of ordinary shares at RM1.25. Publication is
open until 31 January 2020.

Conditions related to the issue are: RM0.30
RM0.35
1. Payment during the application process RM0.30
2. Payment during the process of allotment RM0.30
3. Payment during a 1st call
4. Payment during a 2nd call

On 1 February 2020, the company has received an application number 535,000 units. The company
decided to refund the application for 180,000 units and the refund was made on 28 February 2001.
The surplus application monies will be used to finance the next stages.

Payment for the allotment was received on 5 April 2020. The first call was made on 15 June 2020
and all payment has been paid at 24 June 2020, except Mr Malik, who fails to make payments his
own shares for three lots. There were also earlier calls Puan Latifah’s five lots.

The second call was made on 3 August 2018 and the payment is cleared all on 20 August 2020
except for Mr. Malik, who failed to make payment. On 15 September 2020, the Board decided to
confiscate all the shares owned by Mr. Malik after reminder notices are not response.

On 1 November 2020, shares that were forfeited are reissued at RM0.85. All these issues have
been subscribed and paid in full on 30 November 2020.

You are required to:

a. Prepare journal entry to record all transactions above.
b. Prepare Extract of the Statement of Financial Position as at 31 December 2020.

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QUESTION 10:

Yoyo Bhd has an authorized share capital of RM1,500,000, represented by 1,500,000 ordinary
shares. Ordinary shares issued at 22.1.2018 amounted to RM500, 000 which was issued at par
value and fully paid.

With permission of company article, the Board of Director decided to increase the share capital of
the company by offering 500,000 ordinary shares at a price of RM1.60 on 22/02/2018,. Method of
payment stocks prices are as follows:

On application RM0.25
On allotmen RM0.85
On first call RM0.50

Total of 750,000 share applications were received on 04/04/2018. The Board of director decided
to allot 625,000 shares on the 4 shares for every five shares basis for received applications. The
surplus application monies received during application will be used for allotment. Unsuccessful
applicants will be refunded their money on the date of allotment. Date of allotment is on
05/05/2018.

Ong, who has 500 units failed to pay the first call despite a warning notice was issued.

On 10/10/2018 Ong’s shares was forfeited are reissued to Simon on 11/11/2018 at a price
of RM0.90 per share.
You are required to prepare journal entry for all transactions and Extract of the
Statement of Financial Position.

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QUESTION 11:

Donutman Ltd has authorized capital of 50,000 ordinary shares @RM2.00, with the balance of
RM60, 000 in the share capital. It plans to issue 20,000 ordinary shares to the public at a price of
RM2.20 payable as follows:

On application RM0.40
On allotment RM0.60
On 1st call RM0.60
On 2nd call RM0.60

Applications were received for 40,000 shares and the Board of Directors has decided to:
1. Refuse allotment to applicants for 10,000 shares.
2. Give full allotment to applicants for 10.000 shares.
3. To allot the remaining shares on a pro-rata basis among the other applicants. The surplus
application monies defended as the payment of allotment.

There is a prepayment for the 4,000 shares owned by En.Wan paying a second call on the first call.
En. Halim, who has 2.000 shares failed to pay for the first call. En. Halim shares has been seized
and reissued to Mr. Ahmad at RM1.40.

You are required to prepare journal entry for all transactions and Extract of the
Statement of Financial Position.

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QUESTION 12:

Progress Limited was established with an authorized capital of 1,000,000 ordinary shares of
RM1.00 each of which 500,000 shares have been issued and fully paid. The Company has decided
to issue 200,000 shares at RM1.20 each by the following conditions:

On application RM0.20

On allotment RM0.40

On 1st call RM0.30

On 2nd call RM0.30

At the closing date, a total of 400,000 applications were received and the Board has decided to:

Application for 50,000 shares
Refuse

Full allotment 50,000 shares Allotment with an equal balance

All allotment and 1st call money was received at the time. A shareholder with 2,000 shares has
been paying for two calls during a call are made. During the second call, all monies received except
from a holder of 1,000 shares. After authorized period, 1,000 shares were forfeited. Shares that
were seized were reissued to others as fully paid shares at RM0.90 each.

You are required to provide:

a. The journal to record all transactions
b. Extract of the Statement of Financial Position after the issuance of seized shares.

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QUESTION 13:

Fine Bhd was incorporated with an authorized capital of 20,000,000 ordinary shares which
10,000,000 have been issued and fully paid. In order to seek a listing in the Bursa Malaysia
second board, Fine Bhd issued 5,000,000 ordinary shares at RM2.50 each to the public
payable as follows:

28 February On application RM 0.70
2018
1 April 2018 On allotment RM 0.90
1st call RM 0.50
1 June 2018 2nd and final call RM 0.40

1 November
2018

As at 28 February 2018, Fine Bhd received applications for 7,000,000 new shares and the
company directors resolved that the shares be allotted on a pro-rata basis of five shares for
every seven shares applied for. Any surplus application monies were transferred to an
allotment account to reduce the money due on allotment.

All monies were duly collected when due excerpt for a shareholder with 50,000 shares who
paid the 2nd and final call money at the same time as the 1st call; and another shareholder
with 20,000 shares who failed to pay for the 1st and 2nd call. A resolution was passed and
these shares were forfeited.

You are required to:

a. Show the journal entries of the above transactions
b. Prepare a Statement of Financial Position after all the transactions have been
completed.

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END OF
CHAPTER

When the foolish one speaks, do not reply to him,
for better than a response (to him) is silence, and
if you speak to him you have aided him, and if you

left him (with no reply) in extreme sadness he
dies. (Imam Syafi’e)

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Bibliography
Book:
Akmalia Mohamad Ariff, et al, Financial Accounting and Reporting 2, 2nd edition, Oxford
Jane Lazar, Company and Group Financial Reporting, 9th edition, Pearson
Website:
Accounting Conceptual Framework
http://www.masb.org.my

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