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Kaye Ltd had the following equity balances on 1 January 2010

Kaye Ltd had the following equity balances on 1 January 2010
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Price: $6.99
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Kaye Ltd had the following equity balances on 1 January 2010: Equity: 1,200,000 ordinary shares (fully paid) $1,200,000 800,000 ordinary shares (issued for $1 and paid to 50c) 400,000 $1,600,000 General Reserve 400,000 Plant Replacement Reserve 100,000 Retained Earnings 180,000 Options (10,000 x $1) 10,000 $2,290,000 The options, issued as part of the CEO’s salary package, entitle him to purchase 10,000 ordinary shares in the company for a price of $2. These options can be exercised up to 31 May 2010. Kaye Ltd has a 30 June reporting date. The following events occurred during 2010: 15 January 10 Interim dividend of 10c per share was declared and paid. Shares partly paid were to receive a proportionate amount of dividends. 1 March 10 Final call made on 800,000 partly paid shares. 30 April 10 All call money received. 31 May 10 The CEO exercised his options and purchased 10,000 ordinary shares at the agreed price of $2. 15 June 10 The final dividend of 10c per share on all issued shares was declared. 30 June 10 The following items were recorded: (a) Transfer to General Reserve $110,000 (b) Transfer to Plant Replacement Reserve $40,000 Required: Prepare journal entries to record the above events. Provide narrations. NOTE: This CASE is NOT our property; we are only suggesting solution of this CASE.

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