Question

Question 3 Week 4 (7 marks) Aqua Ltd issues a prospectus inviting the public to subscribe for 30 million ordinary shares of $2.00 each. The terms of the issue are that $1.00 is to be paid on application and the remaining $1.00 within one month of allotment. Applications are received for 36 million shares during July 2019. The directors allot 30 million shares on 15 August 2019. The shares were allotted on a first-come, first-serve basis. The directors refunded the application money for 6 million shares on 15 August 2019. The amounts payable on the allotment are due by 20 September 2019. By 20 September 2019, the holders of 5 million shares have failed to pay the amounts due on allotment. The directors forfeit the shares on 30 September 2019. The shares are resold on 15 October 2019 as fully paid. An amount of $1.90 per share is received. The remaining balance of forfeited shares were refunded on 20 October 2019. Required Provide the journal entries necessary to account for the above transactions and events.

Answer 1

Date	Account titles	Debit	Credit
Jul-19	Bank A/c	$ 36,000,000		1*36,000,000
	Share application A/c		$ 36,000,000
	(To record recept of ordinary share application money)
15-Aug-19	Share application A/c	$ 36,000,000
	Share capital A/c		$ 30,000,000
	(To record issuing shares)
15-Aug-19	Share application A/c	$    6,000,000
	Bank A/c		$    6,000,000
	(To record refund of excess application money received)
20-Sep-19	Share allotment A/c	$ 30,000,000
	Share capital A/c		$ 30,000,000
	(To record calls due)
20-Sep-19	Bank A/c	$ 25,000,000
	Calls in arrears A/c	$    5,000,000
	Share allotment A/c		$ 30,000,000
	(To record receipt of calledup amount)
30-Sep-19	Share capital A/c	$ 10,000,000
	Calls in arrears A/c		$    5,000,000
	Share forfeiture A/c		$    5,000,000
	(To record forfeiture of shares)
15-Oct-19	Bank A/c	$    9,500,000		1.9*5000000
	Share forfeiture A/c	$        500,000		10000000-9500000
	Share capital A/c		$ 10,000,000
	(To record forfeiture shares reissue)
15-Oct-19	Share forfeiture A/c	$    4,500,000		5000000-500000
	Bank A/c		$    4,500,000
	(To return share forfeiture amount to defaulting shareholders)