February 8 As provided for in the constitution, the ordinary shares on which the call was unpaid were forfeited. The constitution in relation to this class of shares further provided for any surplus on resale, after satisfaction of unpaid calls and associated costs, to be returned to the former shareholders.
100,000 “A” ordinary shares, issued at $2, called to $1.80 |
$ 180,000 |
Less: Calls in Arrears - “A” ordinary shares |
$ (3,500) |
120,000 “B” ordinary shares, issued at $1.50, called to $1 |
$ 120,000 |
250,000 5% preference shares, issued at $1, paid to $0.50 |
$ 125,000 |
100,000 $1 options |
$ 100,000 |
General reserve |
$ 250,000 |
Retained earnings “A” ordinary shares - payable as follows: |
$ 600,000 |
$0.80 on application
$0.50 on allotment
$0.50 on 1st call
$0.20 on future calls
“B” ordinary shares - payable as follows:
$0.50 on application
$0.50 on allotment
$0.50 on future calls
February 20 The forfeited shares were re-issued to Melbourne Investments Ltd, as paid to $1.80 per share for $1.40 cash per share. Share issue cost amounted to $800.
February 21 The balance from forfeiture was returned to the former shareholders.
Required: Prepare general journal entries with working out and narrations
Particulars | Debit | Credit | ||
“A” ordinary shares | ||||
Bank A/c …Dr. | 80,000 | |||
To Share Application A/c | 80,000 | |||
(Being the application money received @ $ 0.80 on 100,000 shares) | ||||
Share Application A/c … Dr. | 80,000 | |||
To Share Capital A/c | 80,000 | |||
(No. of Shares allotted x application money per shares) | ||||
(Being the application money on 100,000 shares @ $0.80 per share transferred to share capital account) | ||||
Share Allotment A/c Dr. | 50,000 | |||
To Share Capital A/c | 50,000 | |||
(No. of Shares allotted x allotment money per share) | ||||
(Being the Allotment money on 100,000 shares @ $0.50 per share called) | ||||
Bank A/c …Dr. | 50,000 | |||
To Share Allotment A/c | 50,000 | |||
(Being the allotment money received @ $ 0.50 on 100,000 shares) | ||||
Share Ist Call A/c Dr. | 50,000 | |||
To Share Capital A/c | 50,000 | |||
(Being the Ist Call money on 100,000 shares @ $0.50 per share called) | ||||
Bank A/c …Dr. | 46,500 | |||
Calls in Arrears …Dr. | 3,500 | |||
To Share Ist Call A/c | 50,000 | |||
(Being the Ist Call money received @ $ 0.50 on 93,000 shares) | ||||
“B” ordinary shares | ||||
Bank A/c …Dr. | 60,000 | |||
To Share Application A/c | 60,000 | |||
(Being the application money received @ $ 0.50 on 120,000 shares) | ||||
Share Application A/c … Dr. | 60,000 | |||
To Share Capital A/c | 60,000 | |||
(No. of Shares allotted x application money per shares) | ||||
(Being the application money on 120,000 shares @ $0.50 per share transferred to share capital account) | ||||
Share Allotment A/c Dr. | 60,000 | |||
To Share Capital A/c | 60,000 | |||
(No. of Shares allotted x allotment money per share) | ||||
(Being the Allotment money on 120,000 shares @ $0.50 per share called) | ||||
Bank A/c …Dr. | 60,000 | |||
To Share Allotment A/c | 60,000 | |||
(Being the allotment money received @ $ 0.50 on 100,000 shares) | ||||
Reissue of Shares | ||||
Share Capital A/c … Dr. | 14,000 | |||
To Calls in Arrears | 3,500 | |||
To Forfeited Share A/c | 10,500 | |||
(Being Share forfeited due to unpaid amount) | ||||
Forfeited Share A/c… Dr. | 2,800 | |||
To Share Capital A/c | 2,800 | |||
(Being Discount @ $ 0.40 provided for Share reissue for 7,000 shares) | ||||
Share Issue Expense A/c …Dr. | 800 | |||
To Bank A/c | 800 | |||
(Being Share issue cost amounted to $800 made) | ||||
Forfeited Share A/c… Dr. | 800 | |||
To Share Issue Expense A/c | 800 | |||
(Being Share issue cost amounted to $800 trasferred) | ||||
Bank A/c …Dr. | 9,800 | |||
To Melbourne Investments Ltd | 9,800 | |||
(Being Share reissue amount @ $ 1.40 recieved for 7,000 shares) | ||||
Forfeited Share A/c ...Dr. | 6,900 | |||
To Former Shareholders | 6,900 | |||
(Being Gain on Share reissue disbursed for 7,000 shares) |
Gain on Reissue of Shares | |||
Discount In Issue | 2,800 | Share Capital A/c | 10,500 |
Share Issue Expense A/c | 800 | ||
Net Gain | 6,900 | ||
10,500 | 10,500 |
February 8 As provided for in the constitution, the ordinary shares on which the call was unpaid were forfeited. The constitution in relation to this class of shares further provided for any surpl...
• Prepare the general journal entries to record the above
independent scenarios.
• Narrations to general journal entries must be provided.
• Complete and detailed workings/calculations must be shown.
• Absence of workings/calculations may lead to zero marks
allocated to the particular general journal entry, despite the fact
that the entry might be correct!
PLEASE answer scenario5 to 7 thank you very much
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Case No.1
Oman Oil Limited issued 80,000 shares of OMR 10 each, at par
payable as follows; on application OMR 3; on allotment OMR 2 and on
first call OMR 2 and final call OMR 2. All the shares were
subscribed for and the company received all the money due, with the
exception of the allotment and call money on 2,500 shares. These
shares were forfeited and re-issued at OMR 8 per share.
Question No. 1
i) You are required...