Corona Ltd announced all shares on which the call of $1/share due for payment on 1 September 2020, remains unpaid, will be sold by public auction on 1 November 2020.

• 500000 shares were forfeited
• the forfeited shares were all paid to $1.50 per share
• all the shares were sold at the auction for $2.20 per share and will be credited to $2.50
• costs of forfeiture and reissue amounted to $5000
• the balance of the Forfeited Shares account will be refunded to the former shareholders.

Required

• Prepare journal entries to record the forfeiture and reissue above.
• Discuss the benefits to a company from forfeiting and reissuing shares.