Glair Wash Ltd issued a prospectus on 25 January 2013 inviting applications for up to 20000000 ordinary shares at an issue price of 20c each, payable in full on application. A minimum subscription of $3,000,000 was specified, with share issue costs of $326,240 expected to be incurred. The expected closing date for the offer was 15 March 2013. On 27 March 2013, the company advised that the Initial Public Offering had been withdrawn as the minimum subscription had not been reached. Required A.What is the rationale behind specifying a minimum subscription to be reached before a share issue can be made? B. Assume that the minimum subscription was reached, the offer closed on 15 March 2013, and that 15,000,000 shares were issued at an price of 20c each on 27 March 2013 with share issue costs paid on that day. Prepare the journal entries required to be processed from the 25 January to the 27 March inclusive.
Glair Wash Ltd issued a prospectus on 25 January 2013 inviting applications for up to 20000000 ordinary shares at an issue price of 20c each, payable in full on application. A minimum subscription of $3,000,000 was specified, with share issue costs of $326,240 expected to be incurred. The expected closing date for the offer was 15 March 2013. On 27 March 2013, the company advised that the Initial Public Offering had been withdrawn as the minimum subscription had not been reached. Required A.What is the rationale behind specifying a minimum subscription to be reached before a share issue can be made? B. Assume that the minimum subscription was reached, the offer closed on 15 March 2013, and that 15,000,000 shares were issued at an price of 20c each on 27 March 2013 with share issue costs paid on that day. Prepare the journal entries required to be processed from the 25 January to the 27 March inclusive.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Glair Wash Ltd issued a prospectus on 25 January 2013 inviting applications for up to 20000000 ordinary shares at an issue price of 20c each, payable in full on application. A minimum subscription of $3,000,000 was specified, with share issue costs of $326,240 expected to be incurred. The expected closing date for the offer was 15 March 2013. On 27 March 2013, the company advised that the Initial Public Offering had been withdrawn as the minimum subscription had not been reached.
Required
A.What is the rationale behind specifying a minimum subscription to be reached before a share issue can be made?
B. Assume that the minimum subscription was reached, the offer closed on 15 March 2013, and that 15,000,000 shares were issued at an price of 20c each on 27 March 2013 with share issue costs paid on that day. Prepare the journal entries required to be processed from the 25 January to the 27 March inclusive.
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