Optima issued 500,000 $1 ordinary shares for $1.

Optima issued 500,000 $1 ordinary shares for $1.30 on 1 August 20X2. At the balance sheet date, 31 December 20X2 all the shares issued were fully paid. Costs related to this issue totaled $60,000 and the financial accountant has charged this amount to finance costs in the income statement. The retained profit for the year as per the draft accounts is $210,000.The equity and reserves of Optima at 31 December 20X1 was as follows:

 

 

$000

Equity and reserves

 

Share capital, $1 shares, fully paid

3,500

Share premium

600

Revaluation reserves

400

Retained earnings

940

 

5,440

Requirement

Prepare the accounting adjustments required to ensure that the costs of this share issue are recorded correctly and draft the equity and reserves section of the balance sheet for inclusion in the financial statements for the year ended 31 December 20X2.