At a directors meeting on 16 August it was decided to allot shares in full to

At a directors meeting on 16 august it was decided to

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At a directors’ meeting on 16 August, it was decided to allot shares in full to applicants who had paid the full amount and proportionally to all remaining applicants. According to the company’s constitution, all surplus money from application can be transferred to Allotment and/or Call accounts. The underwriting commission was paid on 28 August. Other share issue costs of $6000 were also paid on this date. All outstanding allotment money was received by the due date. The final call was made on 1 November with money due by 30 November. All money was received on the due date except for the holder of 30 000 shares who failed to meet the final call. On 7 December, as provided for in the constitution, the directors decided to forfeit these shares. They were reissued, on 15 December, as paid to $6 for $5.60 cash. The balance of the Forfeited Shares account was returned to the former shareholder on 16 December. Required Prepare the journal entries to record the transactions of Gum Ltd up to and including that which took place on 16 December 2017. (Show all workings.) GUM LTD General Journal 2017 August 15 Cash Trust Dr 4 200 000 Application Cr 4 200 000 (Cash received on application) August 16 Application Dr 3 000 000 Allotment Dr 2 000 000 Share Capital Cr 5 000 000 (Allotment of 1 000 000 shares)
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Cash Dr 4 200 000 Cash Trust Cr 4 200 000 (Transfer of trust funds) Application * Dr 1 200 000 Allotment Cr 1 000 000 Calls in Advance Cr 200 000 (Allocation of application across allotment and calls in advance) August 28 Share Issue Costs/Share Capital Dr 14 000 Cash Cr 14 000 (Payment of underwriting commission and other share issue costs [$8 000 + $6 000]) September 15 Cash Dr 1 000 000 Allotment Cr 1 000 000 (Cash received on allotment) 2017 November 1 Call Dr 1 000 000 Share Capital Cr 1 000 000 (Call of $1 per share) Calls in Advance Dr 200 000 Call Cr 200 000 (Transfer of calls received in advance) November 30 Cash Dr 770 000 Call Cr 770 000 (Cash received on 770 000 shares)
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December 7 Share Capital Dr 180 000 Call Cr 30 000 Forfeited Shares Liability Cr 150 000 (Forfeiture of 30 000 shares) December 15 Cash Dr 168 000 Forfeited Shares Liability Dr 12 000 Share Capital Cr 180 000 (Reissue of shares forfeited) December 16 Forfeited Shares Liability Dr 138 000 Cash Cr 138 000 (Refund to former shareholders) * Workings Allocation of money received on application No. of Shares applied for No. of Shares Allotted Money Received Application Allotment Call 200 000 200 000 1 200 000 600 000 400 000 200 000 1 000 000 800 000 3 000 000 2 400 000 600 000 - 1 200 000 1 000 000 $4 200 000 $3 000 000 $1 000 000 $200 000 Question 2.17 Series of independent situations Prepare journal entries to implement the following independent decisions: 1. To redeem out of retained earnings 150 000 preference shares, issued and paid to $2.50, at a price of $2.60. The preference shares had been treated as equity. 2. To redeem 150 000 preference shares, recorded as liabilities, fully paid at $1.50 each, for $1.60, this being funded by the issue of 240 000 ordinary shares at an issued price of $1 payable in full on application. Assume all shares were applied for and allotted. 3. To redeem 20 000 $50 debentures by purchasing them on the open market for $48 each. They were previously issued by the company at nominal value. 4. To issue 50 000 options, at an issue price of 75c per option. Each option allows the holder to subscribe for one ordinary share at an exercise price of $3.60 per share on or before 1 July 2017.
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5. By 1 July 2017, 40 000 of the options issued in (4) above were exercised and shares were issued. The remaining options lapsed.
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