1. Kisii Ltd was registered with 400,000 ordinary shares of Shs. 10 each. It offered half of these shares of public subscription as follows.

Shs. 3/= on application

Shs. 5/= on allotment (to include premium)

Shs. 3/= on first call

Shs. 2/= on second and last call

The processing went on as follows.

1. 350,000 applications were received.
2. 50,000 shares were rejected, outright and their money refunded.
3. The receiving applicants were made on prorate basis; their excess application money was transferred to allotment money a/c.
4. Allotment money was dully received.
5. A shareholder with 800 shares failed to pay the 1^st and the 2^nd call. Another shareholder with 1,200 shares failed to pay only the 2^nd call. All other shareholders paid the calls promptly.
6. After a brief due notice, the 200 shares held by defaults were declare forfeit and later re-issued for cash each at ss. 7/= per share.
7. The company paid Shs. 150,000 for formation expenses in cash and bought fixed assets 1,200,000. The rest of funds were held in the bank.

REQUIRED:

1. The relevant journal entries for the above transaction. (15 marks)
2. Prepare relevant ledger accounts. (8 marks)
3. Opening balance sheet. (2 marks)