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Aqua Ltd issues a prospectus inviting the public to subscribe for 30 million ordinary shares of...

Aqua Ltd issues a prospectus inviting the public to subscribe for 30 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 36 million shares during July 2019. The directors allot 30 million shares on 15 August 2019. The shares were allotted on a first-come, first-serve basis. The directors refunded the application money for 6 million shares on 15 August 2019. The amounts payable on the allotment are due by 20 September 2019. By 20 September 2019, the holders of 5 million shares have failed to pay the amounts due on allotment. The directors forfeit the shares on 30 September 2019. The shares are resold on 15 October 2019 as fully paid. An amount of $1.90 per share is received. The remaining balance of forfeited shares were refunded on 20 October 2019.

Required Provide the journal entries necessary to account for the above transactions and events.

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Expert Solution

Date Journal Entries     Amount ( in Millions)

july 2019 Bank a/c Dr. 36

To Share application a/c     36

( Being share application money received)

15/Aug/2019 Share Application a/c Dr 36

To Share capital a/c 30

To Bank a/c ( Refund) 6

( Being Share applicaton money for 30 Million shares @1 transferred to share capital and remaining over subscribed money is returnedand shares are alloted on first -come ,first -serve basis.)

20/Sep/2019 Share Allotment a/c Dr 30

To Share Capital a/c 30

( Being share allotment due on 30 million ordinary shares @ 1)

20/Sep/2019 Bank a/c Dr 25

To Share Allotment a/c 25

   (Being 5 million share holders failed to pay the allotment money due that is transfer to calls-in-arrears account)

30/sep/2019 Share Capital a/c Dr. 5

To. Share Forfeiture a/c 5

(Being shares forfeited for non–payment of allotment money )

15/oct/2019 Bank a/c Dr (5*1.09) 5.45

To share forfeiture a/c   0.45

To Share capital a/c   5

( Being 5 Million shares are re-issued @1.09 per share )

20/Oct/2019 Share Forfeiture a/c         5.45

To Bank a/c    5..45

(Being Shares fortfeited amount refunded)

ekkarill92 answered 1 year ago
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