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Prepare general journal entries to record the above transactions. Show all workings.

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Maverick Ltd issued a prospectus to the public offering 10 million shares at $1.50 each on 1 July 2018. The prospectus specified that $0.70 per share is to payable on application and a further $0.30 will be payable on allotment. The closing date for applications was 31 August 2018.


By the closing date, applications have been received for 14 million shares. To deal with the oversubscription, the directors of Maverick Ltd decided to issue shares to all subscribers on a pro rata basis. Excess money received on application will be credited against the amounts due on allotment.

All amounts due on allotment are paid by the due date of 15 September 2018. 


On 30 November 2018, Maverick Ltd made the call for the outstanding balance of $0.50 per share with the amounts being payable by 31 December 2018. Holders of 2 million shares fail to pay the amount due of the call by the due date, and on 15 January 2019 the directors forfeited the shares. The forfeited shares were cancelled and reissued on 15 February 2019 as fully paid to $1.50 on payment of $1.20 per share. The reissue of the forfeited shares cost $6 000. The balance in the forfeited shares account were refunded to the forfeited shareholders by 28 February 2019.


REQUIRED

Prepare general journal entries to record the above transactions. Show all workings.

Top Answer

Given below is the detailed... View the full answer

1.jpg

date
account titles
debit
credit
calculation
31-Aug-2018 cash
$9,800,000
14000000*0.7
share application
$9,800,000
31-Aug-2018 share application
$9,800,000
share capital
$7,000,000
10000000*0.7...

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