Reference no: EM133001411

Question - Accounting for Share Capital - Florence Ltd makes an offer to the public for investors to subscribe for 20 Marked out of million shares. The shares are issued at $3.00 per share. Applications for 15.00 shares close on 15 July 2019, with $2.00 being paid on application and a further $1.00 being payable within one month of allotment.

By 15 July 2019 applications have been received for 22 million shares, and it is decided that all subscribers will receive shares on a pro rata basis, with any excess paid on application to be offset against the amount due on allotment. The shares are allotted on 20 July 2019.

Subsequently, holders of 4 million shares fall to make their payments due on allotment by 20 August 2019. On 31 August the 4 million shares are forfeited and auctioned as fully paid. An amount of $2.50 is received for each share sold.

REQUIRED -

1. How do Australian Accounting Standards require preference shares to be disclosed?

2. Provide the accounting journal entries necessary to account for the transactions and events above.