Fresh Poultry Ltd was organized on 05 July, 2019 with the following authorized capital:- a) Common Stock 50,000 of Rs. 100 each. b) 12% Cumulative Preferred Stock 50,000 of Rs. 50 each. The Company issued 50% of each category of shares upon receipt of

Let's break this down step by step to pass the necessary accounting entries and prepare the Balance Sheet for Fresh Poultry Ltd as at 30 June 2020. ### A) Pass Necessary Accounting Entries 1. **Issuance of Common and Preferred Stock on 15 August 2019**: - **Common Stock** (50% of 50,000 shares = 25,000 shares) - Cash Received = 25,000 shares * Rs. 100 = Rs. 2,500,000 - **Preferred Stock** (50% of 50,000 shares = 25,000 shares) - Cash Received = 25,000 shares * Rs. 50 = Rs. 1,250,000 **Journal Entries:** ```plaintext Date Account Titles Debit Credit ------------------------------------------------------------------------------- 15/08/2019 Cash 3,750,000 Common Stock 2,500,000 Preferred Stock 1,250,000 (Issuance of 25,000 Common Shares at par and 25,000 Preferred Shares at par) ``` 2. **Issuance of Common and Preferred Stock on 20 December 2019**: - **Common Stock** (20% of 50,000 shares = 10,000 shares) - Cash Received = 10,000 shares * Rs. 100 = Rs. 1,000,000 - Premium Received = 10,000 shares * 15% * Rs. 100 = Rs. 150,000 - **Preferred Stock** (20% of 50,000 shares = 10,000 shares) - Cash Received = 10,000 shares * Rs. 50 = Rs. 500,000 - Premium Received = 10,000 shares * 15% * Rs. 50 = Rs. 75,000 **Journal Entries:** ```plaintext Date Account Titles Debit Credit ------------------------------------------------------------------------------- 20/12/2019 Cash 1,725,000 Common Stock 1,000,000 Additional Paid-in Capital - Common 150,000 Preferred Stock 500,000 Additional Paid-in Capital - Preferred 75,000 (Issuance of 10,000 Common Shares at par and 10,000 Preferred Shares at par) ``` 3. **Issuance of Common Stock for Machinery**: - **Common Stock** (10,000 shares) - Equipment Value = Rs. 1,200,000 - Par Value = 10,000 shares * Rs. 100 = Rs. 1,000,000 - Additional Paid-In Capital = Rs. 1,200,000 - Rs. 1,000,000 = Rs. 200,000 **Journal Entry:** ```plaintext Date Account Titles Debit Credit ------------------------------------------------------------------------------- (date of machinery acquisition) Machinery 1,200,000 Common Stock 1,000,000 Additional Paid-in Capital - Common 200,000 (Issuance of 10,000 Common Shares for Machinery) ``` ### B) Prepare a Balance Sheet as at 30 June 2020 **Fresh Poultry Ltd.** **Balance Sheet** **As at 30 June 2020** | Liabilities and Equity | Amount (Rs.) | |--------------------------------------------|-----------------| | **Liabilities** | | | **Current Liabilities** | | | (Assuming there are no current liabilities for simplification) | 0 | | **Total Liabilities** | 0 | | | | | **Equity** | | | Common Stock (Total Issued = 25,000 + 10,000 = 35,000) | 3,500,000 | | Preferred Stock (Total Issued = 25,000 + 10,000 = 35,000) | 1,750,000 | | Additional Paid-in Capital - Common | 350,000 | | Additional Paid-in Capital - Preferred | 75,000 | | **Total Equity** | 5,675,000 | | | | | **Total Liabilities and Equity** | 5,675,000 | ### Summary of Issued Shares - Common Stock: 35,000 shares (Rs. 3,500,000) - Preferred Stock: 35,000 shares (Rs. 1,750,000) - Total Additional Paid-in Capital: Rs. 425,000 (Rs. 350,000 + Rs. 75,000) ### Note The above representation is simplified, excluding current liabilities and other potential expenses for clarity. Adjustments may be needed in a real-world setting to account for other business transactions and expenses.