solution

The following additional information has not yet been taken into account in the above trial balance: 1. Share issue: a. During the first quarter of 2020 financial year, the directors decided to issue 350 000 shares, at an amount of R4,50 per share. The share-issue costs were R52 500 2. Office Rental: a. On 1 January 2018, DA signed a 5-year lease agreement for office space in Sandton. Per the agreement, DA is required to pay R43 000 per month (in arrears), with payment being due on the 6th day of the following month. 3. Insurance: a. DA has an active insurance policy over their construction equipment. The insurance premiums are normally R14 250 per month. On 1 September 2020, DA decided to pay the insurance premiums for the next 12 months in advance, as this entitled DA to a 5% discount on the above amount. 4. Bad debts: a. DA received a notification that one of their major debtors, Barry Renovations (Pty) Ltd, was in liquidation. This debtor makes up 75% of the debtors balance at year- end. Management of DA have after careful deliberation concluded that only 20% of the amount owed is recoverable. b. Management of DA have correctly estimated that the allowance for expected credit losses for 2020 should be 5% of all other debtors. 5. Debentures: a. DA issued 150 000 10% debentures of R10 each on 1 January 2020 at a discount of 5%. These debentures are redeemable at par value 5 years after issue. The effective interest rate is 11,365%. 6. Dividend: a. On 28 December 2020 the Directors of DA declared a dividend of R1,20 per share. b. This dividend is subject to withholding tax of 20%. C. As at 31 December 2020, the dividend had not yet been paid. You are required to: 1 Provide the journal entries that need to be recorded to account for the additional information points 1-6. Narrations are required.