Early July 2016, ABC Limited announced to issue 120000 shares at $8 each: $4.8 payable upon...

Early July 2016, ABC Limited announced to issue 120000 shares at $8 each: $4.8 payable upon application; $2.4 on allotment of shares; and the rest to be reserved for a call sometime in the future.

By the end of July, the company has received applications for 160000 shares.

The board of directors met on 1 August to decide on the allotment of shares. They decided to allot shares proportional to the number of shares each application applied for. All remaining allotment money was to be received by the end of month.

On the 15 May 2017, the company made a call for the rest of the money, payable in the next 14 days.

Call money for all but shareholders with 6000 shares failed to pay, leading to the forfeiture of their shares.

According to the company constitutions, shareholders with their shares forfeited were entitled to a full refund. The company paid this amount the next day after the forfeiture of shares.

Required:

Journalise the above transactions. Clearly show the dates. Narrations are not required.

Expert Solution

Date	Accounting Description	Dr.	Cr.
July 31, 2016	Bank A/c Dr.	768000
	To Share Application A/c ( 160000 X 4.80 $)		768000
	( Being application money received on 160000 Applicatin @ 4.80 $)
July 31, 2016	Share Application A/c Dr. ( 160000 X 4.80 $)	768000
	To Share Capital A/c ( 120000 X 4.80 $)		576000
	To Share Allotment A/c		192000
	( Being application money transferred to Share capital A/c and Balance transferred to Sahee allotment A/c)
August 01, 2016	Share Allotment A/c Dr. (120000 X 2.4 $)	288000
	To Share Capital A/c ( 120000 X 2.4$)		288000
	( Being Share Allotment amount due on allotment @ 2.40 $)
August 31, 2016	Bank A/c Dr.	96000
	To Share Allotment A/c ( 40000 X 2.4 $)		96000
	( Being share allotment amount received)
May 15, 2017	Share First and Final Call A/c Dr. ( 120000 X 0.8 $)	96000
	To Share Capital A/c ( 120000 X 0.8$)		96000
	( Being the first and final call due on the 120000 shares @ 0.8 $)
May 29, 2017	Bank A/c Dr.	91200
	To Share First and Final call A/c		91200
	( Being First and Final Call received on 114000 X 0.8 $)
May 29, 2017	Share Capital A/c Dr.	48000
	To Forfeiture shares A/c		43200
	To Share First and Final call A/c		4800
	( Being Share 6000 forfeited for non payment of First and final Call @ 0.8 $)
May 30, 2017	Forfeiture Shares A/c Dr.	43200
	To Bank A/c		43200
	( Being Shares amount refunded against forfeitures)

	Hence Share Capital
	114000 X 8	912000
A	To Share Capital A/c ( 120000 X 4.80 $)		576000
B	To Share Capital A/c ( 120000 X 2.4$)		288000
C	To Share Capital A/c ( 120000 X 0.8$)		96000
D	Share Capital A/c Dr.		-48000
	Total ( A+ B+ C+D)	912000

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