A newly registered company, Silver Dollar Investments Ltd, has issued a prospectus dated 1st January 2017 inviting the public to apply for the following classes of shares. Both classes of shares have voting rights:
– 432,000 Ordinary A shares at $6 per share. The terms of the shares on issue are $2.50 on application, $1.50 on allotment, $1.20 on the first call and $0.80 on the second call.
– 200,000 Ordinary B shares at $3 per share, $2.00 on application and $1.00 on allotment.
If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will be applied to allotment and calls before any refunds will be given.
On 28th February 2017 applications closed and applications had been received for the following:
Ordinary A Shares
Applications were received for 480,000 shares in total, with applications for 100,000 shares paying $6, applications for 200,000 shares paying $4.00 and the remainder paying only the application fee.
Ordinary B Shares
Applications were received for 250,000 Ordinary B shares, with all applications received paying the full $3.00.
On the 28th of March the shares were allotted, with all allotment money owed paid by the 15th of April. On the 28th of March share issue costs of $20,000 for the Ordinary A shares and $15,000 for the Ordinary B shares were also paid. The share issue costs related to legal expenses associated with the share issue and fees associated with the drafting and advertising of the prospectus and share issue.
On 1st May the first call is made on the Ordinary A shares and on 1st June the call money was received except for the call on 12,000 shares. The shares were forfeited on 15th June. On 20th June the $6 shares were reissued at $5 paid to $5.20. Costs associated with reissuing the forfeited shares totalled $10,000. The money has not yet been refunded to the defaulting shareholders.
Prepare journal entries for the above transactions. Note: each class of ordinary shares should have separate application, allotment and share capital accounts and the entries should be in strict date order of the underlying event.