Reference no: EM132973385
Heri ltd was incorporated in 2016 with an authorized share capital of 8,000,000 shares of sh. 10 each. In the year 2017 , the company invited applications for 2,400,000 shares payable as follows:
On application
On allotment First call Second call sh.2 5
4(including premium) 2
Applications were received for 4,800,000 shares.
The directors decided to deal with the applications as follows.
i) Allot fully applications for 1,800,000 shares.
ii) Reject and refund money for 600,000 shares.
iii) Allot the remainder on a pro-rata basis and apply excess application money for
subsequent calls.
John who was allotted 4,000 shares failed to pay for the final call. The shares were forfeited and later reissued to Joram at sh. 9 per share as fully paid.
Required:
Problem a) Journal entries to record the issue of shares in 2017.
Problem b) Post the journal to the ledger accounts.
Problem c) Show an extract of the statement of financial position on completion of the issue.
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