Reference no: EM132823844

Moon Ltd issued a prospectus on 1 November offering 40,000 ordinary shares for $5 per share payable in three instalments: $3 on application, $1 on allotment and $1 on call.

• The offer closed on 30 November. Applications for 50, 000 ordinary shares were received by 30 November.
• On 1 December, the directors resolved to allot the ordinary shares pro rata with all applicants receiving 80% of the shares applied for. Excess application monies were allowed to be held. The shares were duly allocated.
• Share issue costs of $8,600 were paid on 5 December.
• The allotment was made on 10 December and all money was received by 30 December.
• On 30 January, the call was made for the unpaid amount of $1 per share. On 10 February, all call monies were received except those owing on 5,000 shares. On that date, the directors resolved to forfeit the 5,000 shares for non-payment of the call. The constitution of the company directs that forfeited amounts are not to be refunded to shareholders.
• On 20 February, all the forfeited shares were re-issued to a private company for $4.50 each fully paid to $5. The re-issue cost was $500.

Required:

Problem 1: Prepare necessary journal entries for above transactions.