Share issues, options, statement of changes in equity    LO6, 8, 9 On 30 June 2019, the equity accounts of Crayfish Ltd consisted of: 120 000 ordinary shares, issued at $2.50 each, fully paid $300 000 Options (80 000 at 50c each)* 40 000 General reserve 30 000 Forfeited shares reserve 2 000 Retained earnings 75 000 *The options were exercisable between 1 May 2020 and 31 May 2020. Each option allowed the holder to buy one ordinary share for $3 each Required 1. Prepare general journal entries, including any closing entries required, to record the following transactions that occurred during the year ended 30 June 2020. • The final 6c per share dividend for the year ended 30 June 2019 was paid on 27 September 2019. Shareholder approval to pay the dividend had been obtained at the annual general meeting on 20 September. • On 1 October, the directors issued a prospectus offering 40 000 ordinary shares at an issue price of $2.80, payable $2 on application and 80c as a future call. The closing date for application was 31 October 2019. The share issue was underwritten by Support Stockbrokers for a fee of $2500, payable on 15 November 2019. • By 31 October 2019, applications for 50 000 shares had been received. • On 5 November 2019, the directors allotted the shares pro rata, with applicants receiving 80% of their requested shares. The company’s constitution allows excess application monies to be retained and used to offset future calls payable. • On 15 November 2019, the underwriting fee was paid. • On 31 December 2019, the directors announced an interim dividend of 3c per share payable in cash on 1 February. • To raise funds for expansion, the directors sold a parcel of 80 000 ordinary shares to Iron Jays Finance on 28 April 2020 at an issue price of $2.90 per share. • By 31 May 2020, the holders of 65 000 options had indicated that they wished to purchase shares. On 2 June 2020, 65 000 ordinary shares were issued with monies being payable by 21 June. Options not exercised duly lapsed. • All outstanding monies were received with respect to shares issued to option holders. • Profit for the year was $69 420. On 30 June 2020, the directors decided to: – transfer $30 000 to the general reserve – declare a final 5c per share dividend. Shareholder approval for this dividend will be sought at the annual general meeting in September 2020. 2. Prepare a statement of changes in equity for the year ended 30 June 2020. 3. Crayfish Ltd has recognised a ‘forfeited shares reserve’ as part of equity. Explain how and why such a reserve would be created.