Reference no: EM132523839

Question - Le Grange Ltd was incorporated with authorized share capital consisting of 500 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.

On the 01 January 2014, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par. Legal, advertising and marketing expenses of N$ 75 000 relating to the establishment of the company, were incurred and paid for on 02 February 2014.

During the year of 2014, the remaining shares were offered to the public as follows:

The offer for the subscription of share opened on 01 March 2014 and closed on 25 March 2014.

The ordinary shares were offered at a premium of 30c per share and the preference shares were offered at par. The issue is being underwritten by Le Grange Underwritten Ltd for a commission of 5%. A total of 600 000 preference shares and 1 500 000 ordinary shares were applied for.

Allotment of shares took place on 15 April 2014 and the available shares were allotted and the necessary refunds made. On 21 April 2014, the terms with the underwriters' agreement were implemented. All share issue and preliminary expenses should be written off against the share premium account.

You are required to:

1. Record the transactions (from 01 March 2014 - 15 April 2014) with regard to the issue of the shares in the general journal of Le GrangeLtd. Narrations are required.

2. Calculate the commission amount that is payable to Le Grange Underwriters Ltd.

3. Prepare the journal entry to write off the preliminary expenses.