Reference no: EM132755241

On 1 June 2019, Bluebell Lid was incorporated and a prospectus was issued inviting applications for 200,000 shares, at an issue price of $20, payable $10 on application, $5 on allotment and $2.50 on each of two calls to be made at intervals of 4 months after the date of allotment. By 30 June, applications were received for 240,000 shares. On 3 July, the directors allotted 200,000 ordinary shares to the applicants in proportion to the number of shares for which applications had been made. The surplus application money was offset against the amount payable on allotment. The balance of the allotment money was received by 10 July. Legal costs of forming the company were $4,000 and were paid on 11 July. Share issue costs of $2,000 were also paid on the same date. The two calls were made on the dates stated in the prospectus, but the holders of 20,000 shares did not pay either call. In addition, a holder of another 10,000 shares did not pay the second call On 10 May 2020, as provided by the company's constitution, the directors forfeited the 30,000 shares on which calls were unpaid. On 25 May 2020, the forfeited shares were reissued as fully paid for a consideration of $18 per share. Costs of forfeiture and reissue amounted to $500. The constitution does provide for refund of any balance in the forfeited shares account after reissue to former shareholders.

Required:

Problem 1: Prepare journal entries to record all of the above events from the 1 June 2019 to 25 May 2020.