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.

Solutions

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

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

ABC Limited had offered 500,000 ordinary shares of ksh. 10 each that were payable as follows:...

ABC Limited had offered 500,000 ordinary shares of ksh. 10 each that were payable as follows: On application ksh.4 On allotment Ksh. 5.00 (including premium) On First and final call Ksh 3.00 400 000 applicants were received. All amounts due on allotment and calls were received on due dates except for one member holding 15,000 shares who never paid for the calls. After giving him the time and without success the directors declared the shares for feighted and were later...

Beniluz Company was formed on July 1, 2016. It was authorized to issue 1,000,000 shares of...

Beniluz Company was formed on July 1, 2016. It was authorized to issue 1,000,000 shares of $5 par value common stock and 200,000 shares of 4% $100 par value, cumulative and nonparticipating preferred stock. Beniluz Company has a July 1-June 30 fiscal year. The following information relates to the stockholders’ equity accounts of Penn Company: Common Stock Prior to the 2020-21 fiscal year, Beniluz Company had 304,000 shares of outstanding common stock issued as follows: 1. 220,000 shares were issued...

McMinn Publications was organized early in 2016 with authorization to issue 20,000 shares of $100 par...

McMinn Publications was organized early in 2016 with authorization to issue 20,000 shares of $100 par value preferred stock and 1 million shares of $1 par value common stock. All of the preferred stock was issued at par, and 300,000 shares of common stock were sold for $20 per share. The preferred stock pays a 10 percent cumulative dividend. During the first five years of operations (2016 through 2020) the corporation earned a total net income of $4,560,000 and paid...

ABC Ltd commenced operations on 25 September 2016 by issuing 350 000 $5.00 shares, payable in...

ABC Ltd commenced operations on 25 September 2016 by issuing 350 000 $5.00 shares, payable in full on application on a first-come, first-served basis. By 30 November 2016 the shares were fully subscribed and duly allotted. There were share issue costs of $10 000. No additional shares were issued during the year ending 30 June 2017. 75 000 fully paid ordinary shares have been issued on 1 October 2017 at the price of $4.00. $135 000 dividends (31.76 cents per...

In 2016, Pronghorn Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares...

In 2016, Pronghorn Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Pronghorn had revenues of $18,200 and expenses other than interest and taxes of $8,400 for 2017. (Assume that the tax rate is 40%.) Throughout 2017, 2,000 shares of common stock were outstanding; none of the bonds was converted or redeemed. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $ (b)...

Subjects