Diary Ltd co. placed its share capital of 1 million divided into equity shares of Kshs. 10 each for public subscription. The amount was payable in installments as under:

Kshs. 2 on application per share

Kshs. 2.50 on allotment per share

Kshs. 3 on 1st call.

Kshs. 2.50 on 2nd and final call per share applications were received for 180,000 shares which were allotted on 1st August 2007 as under:

i) To the applicants of 90,000 shares full allotment

. ii) To the applicants of 40,000 shares 25% allotted.

iii) The rest of the applications were rejected due to technical defects and money refunded to the applicants.

First call was made on 1st November 2007 while the second call was made on 1st February 2008.

According to the terms of issue, the surplus application money could be kept by the directors for use against money due to allotment and subsequent calls.

One shareholder to whom 10,000 shares were allotted failed to pay first call money and on his failure to pay second call money, his shares were forfeited 7,000 of his forfeited shares were re-issued at a fully paid price of Kshs. 8 per share.

Required:

i) Journal entries to record the above transactions. (10 marks)

ii) Bank account. (3 marks)

iii) Balance sheet extract. (5 marks)