On 1 July 2016 Kashmir Ltd was registered as a public company. The financial year end is 30 June each year. On 5 July a prospectus was issued inviting applications for 200,000 shares payable $1.00 on application, 50 cents on allotment and 25 cents on call one and 25 cents on call two. Call one was made three months after the date of allotment, and call two was made six months after the date of allotment.
By 31 July 2016 applications were received for 250,000 shares. On 3 August 2016 the directors allotted 200,000 shares to the applicants on a pro rata basis. The surplus application money was offset against the amount payable on allotment. The balance of the allotment money was received by 15 August 2016. Share issue costs were $15,000, and these were paid on 31 August 2016.
The two calls were made on the dates stated in the prospectus, and a month after, each call monies were received, except that the holders of 15,000 shares did not pay either call. In addition a holder of another 5,000 shares did not pay the second call. All the shares with unpaid call money were forfeited on 2 July 2017 and reissued on 25 July 2017 to existing shareholders with the price of $1.50 each. The money of forfeited shares was refunded on 10 August 2017 after paying the re‐issuing cost of the solicitor amounted to $1,000 on 1 August 2017.
Prepare entries in general journal form to record the above transactions. 45 marks
Prepare a Statement of Shareholders' Equity for Kashmir Ltd as at 30 June 2017 5 marks