Question
In July 2020, Worley Ltd calls for public subscriptions for 20 million shares. The issue price per share is $1.20, to be paid in three
In July 2020, Worley Ltd calls for public subscriptions for 20 million shares. The issue price per share is $1.20, to be paid in three parts, these being $0.50 on application, $0.40 within one month of the shares being allotted and $0.30 within two months of the first and final call, with the call for final payment being payable on 1 September 2020. By the end of July, when applications close, applications have been received for 24 million shares; that is, 4 million in excess of the amount to be allotted. The shares are allotted on 1 August 2020. Regarding final call for $0.30 per share, it becomes apparent that the holder(s) of 200 000 shares have failed to pay the amount due. As a result, the directors of the company elect to forfeit the shares.
Worley Ltd reissues the shares on 1 October 2020 as fully paid for an amount of $1.00; that is, $0.20 below the original issue price. The costs involved in generating the sale of the shares amount to $5,000.
Required:
Provide the accounting entries to record the issue of Worley Ltds shares.
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