Prepare journal entries to record the forfeiture and reissue

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Reference no: EM132821075

Question - Corona Ltd announced all shares on which the call of $1/share due for payment on 1 September 2020, remains unpaid, will be sold by public auction on 1 November 2020.

-500 000 shares were forfeited

-the forfeited shares were all paid to $1.50 per share

-all the shares were sold at the auction for $2.20 per share and will be credited to $2.50

-costs of forfeiture and reissue amounted to $5000

-the balance of the Forfeited Shares account will be refunded to the former shareholders.

Required -

Prepare journal entries to record the forfeiture and reissue above.

Discuss the benefits to a company from forfeiting and reissue.

Reference no: EM132821075

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