Provide the journal entries necessary to account

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Tom Hanks Ltd issues a prospectus inviting the public to subscribe for 5 million ordinary shares of $2.00 each. The terms of the issue are that $1.00 is to be paid on application and the remaining $1.00 within one month of allotment. Applications are received for 6 million shares during July 2015. The directors allot 5 million shares on 5 July 2015. All applicants receive shares on a pro rata basis.

The amounts payable on allotment are due by 5 August 2015. By 5 August 2015, the holders of 1 million shares have failed to pay the amounts due on allotment. The directors forfeit the shares on 10 August 2015. The shares are resold on 25 August 2015 as fully paid. An amount of $1.85 per share is received. Required: Provide the journal entries necessary to account for the above transactions.

Reference no: EM132406499

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