Exercise 13.11: Issues of shares and options

White Foam Ltd has been investigating the expansion of the company into new areas of development. In order to fund these new investments the company needs an increase in equity. On 1 April 2019 the company decided to make a public issue to raise $1200000 for new capital development. The company issued a prospectus inviting applications for 400000 $3 shares, payable in full on application. There was an additional incentive offered by White Foam Ltd to investors, as those shareholders who acquired more than 20000 shares were allowed to acquire options at 50 cents each. These options allowed the investors to acquire shares in White Foam Ltd at $3.20 each, the acquisition having to occur before 30 November 2019.

White Foam Ltd had received applications for 500000 shares and 40000 options by 10 May. On 28 May the shares and options were allotted and money returned to unsuccessful applicants. All applicants who acquired options also received shares.

By 30 November 2019 the price of each of White Foams shares was $3.35. Holders of 36000 options exercised their options in November, with the remaining options lapsing.

Required:

Prepare the journal entries in the records of White Foam Ltd in relation to the above events.