Reference no: EM132997930

Question - SuperStar Ltd issues a prospectus inviting the public to subscribe for 30 million ordinary shares of $4.00 each. The terms of the issue are that $2.00 is to be paid on application and the remaining $2.00 within one month of allotment. Applications are received for 36 million shares. The directors allot 30 million shares. All applicants receive shares on a pro rata basis. The holders of 6 million shares have failed to pay the amounts due on allotment by the due date. The directors forfeited those shares. The forfeited shares were resold as fully paid. An amount of $3.40 per share is received. Keeping the shortfall amount, the directors returned the remaining money to the shareholders whose shares were forfeited. Provide the journal entries necessary to account for the above transactions and events.