Reference no: EM132318935

Question

Moschino Ltd was incorporated on 30 June 2018. On 1 July 2018, the company issued a prospectus offering 300 000 ordinary shares at an issue price of $10, payable on the following terms:

$3 on application
$3 on allotment
$4 on call

On 1 August, 2018 application received on 350 000 shares with a summary as follows:

-200,000 shares applied and paid $3 per share
100,000 shares applied and paid $6 per share
50,000 shares applied and paid $10 per share

Since the shares had been oversubscribed, the director cannot allot all the shares applied for. The director finally decided to allot only 150,000 shares to the applicants that applied for 200,000 shares. The remaining applicants were allocated in full. Shares were allotted to all applicants on 15 August 2018. All money received in excess of amounts due on application was applied to amounts due on allotment and calls. Where appropriate, refunds of application money were made.

All allotment money was received by 31 August 2018. On 1 September 2018, Moschino Ltd's directors made the call, payable by 30 September 2018. By 30 September, call money had been received except from holders of 25 000 shares.

On 31 October 2018, all unpaid call was forfeited. On 10 December 2018 the company paid solicitor in regarding the re-issue of the forfeited shares $5,000 and re-issued the forfeited shares to existing shareholders at lower price of $8 and received full payment. At the same day, the company refunded the remaining forfeited shares amount.

a) Prepare journal entries to record the above events.

b) Prepare the statement of changes in equity for the period ending 31 December 2018.