Reference no: EM132672440

Noosa Ltd makes an offer of shares to the public. In its prospectus it notes that the shares are to be issued at $1.00 per share. The shares are to be paid in three instalments. The first payment, to be made on application, is $0.40. A second amount of $0.40 will be due within one month of allotment, and the third amount of $0.20 will be due within one month of the first and final call, which will be made within six months of the shares being allotted. Noosa Ltd will seek to issue 10,000,000 shares. The closing date for applications is 31 August 2020.

• By the closing date, applications have been received for 14,000,000 shares. The directors meet on 5 September 2020 and decide to allot shares on a first-come first-served basis, and application money is refunded to unsuccessful applicants.
• All amounts due on allotment are paid by the due date. The first and final call for $0.20 is made on 30 November 2020, with the amounts being due by 31 December 2020. Holders of 2,000,000 shares fail to pay the amount due on the call by the due date, and on 15 January 2021 these holders have their shares forfeited. The forfeited shares are auctioned on 15 February 2021. An amount of $0.70 per share is received. The cost of holding the auction is $5,000. The shares are sold as 'fully paid'.
• The balance of the Forfeited Shares Account is returned to the former shareholders on 20 February 2021.

Required:

Problem 1: Provide the journal entries to account for the above entries. Show all relevant dates and workings. Narrations are not required.