In: Accounting
Tom Hanks Ltd issues a prospectus inviting the public to subscribe for 5 million |
ordinary shares of $2.00 each. The terms of the issue are that $1.00 is to be paid on |
application and the remaining $1.00 within one month of allotment. |
Applications are received for 6 million shares during July 2015. The directors allot 5 |
million shares on 5 July 2015. All applicants receive shares on a pro-rata basis. The |
amounts payable on allotment are due by 5 August 2015. |
By 5 August 2015, the holders of 1 million shares have failed to pay the amounts due |
on allotment. The directors forfeit the shares on 10 August 2015. The shares are |
resold on 25 August 2015 as fully paid. An amount of $1.85 per share is received. |
Required: |
Provide the journal entries necessary to account for the above transactions |