Share issue, options Madrid Ltd has the following shareholders' equity at 1 January 2020: Share capital - 500000 shares Asset revaluation surplus $1,240,000 350,000 Retained earnings 110,000 On 1 March the company decided to make a public share issue to raise $600 000 for new capital development. The company issued a prospectus inviting applications for 200 000 shares, payable in full on application. Shareholders who acquired more than 10 000 shares were allowed to buy options at 50 cents each. These options enabled the owner to buy shares in Madrid Ltd at $3.50 each, the acquisition having to occur before 31 December 20. By 25 March the company had received applications for 250 000 shares and for 20,000 options. The shares and options were allotted on 2 April, and money returned to unsuccessful applicants on the same day. All applicants who acquired options also received shares By 31 December 2020, the company's share price had reached $3.75. Holders of 18,000 shares exercised their options in December. The remaining options lapsed. Required Prepare the journal entries in the records of Madrid Ltd in relation to the equity transactions in 2020.
Share issue, options
Madrid Ltd has the following shareholders' equity at 1 January 2020:
| Share capital - 500000 shares Asset revaluation surplus |
$1,240,000 350,000 |
| 110,000 |
On 1 March the company decided to make a public share issue to raise $600 000 for
new capital development. The company issued a prospectus inviting applications for
200 000 shares, payable in full on application. Shareholders who acquired more than
10 000 shares were allowed to buy options at 50 cents each. These options enabled the
owner to buy shares in Madrid Ltd at $3.50 each, the acquisition having to occur
before 31 December 20.
By 25 March the company had received applications for 250 000 shares and for
20,000 options. The shares and options were allotted on 2 April, and money returned
to unsuccessful applicants on the same day. All applicants who acquired options also
received shares
By 31 December 2020, the company's share price had reached $3.75. Holders of
18,000 shares exercised their options in December. The remaining options lapsed.
Required
Prepare the
transactions in 2020.
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