The balance of the Forfeited Shares account was returned to the former

The balance of the forfeited shares account was

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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) 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
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7 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) December 7 Share Capital Dr 180 000 Call Cr 30 000 Forfeited Shares Account Cr 150 000 (Forfeiture of 30 000 shares) December 15 Cash Dr 168 000 Forfeited Shares Account Dr 12 000 Share Capital Cr 180 000 (Reissue of shares forfeited) December 16 Forfeited Shares Account Dr 138 000 Cash Cr 138 000 (Refund to former shareholders)
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8 * 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
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9 Question 2.15 Shares, debentures and options At 30 June 2016, the trial balance of Evergreen Ltd contained the following. EVERGREEN LTD Trial Balance as at 30 June 2016 Current assets Plant and equipment (net) Goodwill Retained earnings $ 300 000 820 000 320 000 900 000 Accounts payable 10% unsecured notes Share capital $ 340 000 500 000 80 000 preference shares issued at $10, paid to $5 1 100 000 ordinary shares issued at $2, paid to $1 400 000 1 100 000 $ 2 340 000 $ 2 340 000 After a number of years of unprofitable trading, the company underwent the following restructure to improve its financial position: 1. A call of $5 per share was made on the issued preference capital and a call of $1 on each of the ordinary shares. All call money was duly received. 2. The ordinary shareholders were given the following options: A rights issue of 1 ordinary share, at an issue price of $2, payable in full on application, for every 10 shares held. To apply for one $50 7% debenture for every 100 shares held. These were payable in full on application. Holders of 600 000 shares chose the first option and holders of 500 000 shares chose the second option. All money was received when due. Required Prepare general journal entries to record the above events. EVERGREEN LTD General Journal 1. Call - Preference Dr 400 000 Call - Ordinary Dr 1 100 000 Share Capital - Preference Cr 400 000 Share capital - Ordinary Cr 1 100 000 (Call of $5 on 80 000 preference shares and $1 call on 1 100 000 ordinary shares) Cash Dr 1 500 000 Call - Preference Cr 400 000 Call - Ordinary Cr 1 100 000 (Receipt of calls) 2. Cash Dr 120 000
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10 Share Capital - Ordinary Cr 120 000 (Cash on 60 000 shares under rights issue) Cash Trust Dr 250 000 Application - Debentures Cr 250 000 (Cash on 5 000 $50 debentures payable in full on application) Application - Debentures Dr 250 000 Debentures Cr 250 000 (Issue of 5 000 $50 debentures) Cash Dr 250 000 Cash Trust Cr 250 000 (Transfer from trust account)
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