On May 2018, Company S.A. issued a prospectus inviting the public to subscribe 5 million ordinary shares of $5.0 each. The company, listed on the New Zealand Stock Exchange, requested that the issue price be paid in three parts, these being $2.0 on application, $2.0 within two months of the shares being allotted and $1.0 within five months following allotment. Applications were received for 7 million of shares during May 2018. The directors allotted 5 million shares on 1 May 2018. All applicants received shares on a pro rata basis. The amounts payable on allotment were due by 1 July 2018 for call one and 1 October 2018 for call two. By 1 October 2018, the holders of 1 million shares had failed to pay the amounts due on allotment. The directors considered the shares forfeit on 15 October 2018. Subsequently, the shares were resold on 31 October 2018 as fully paid and an amount of $4.5 per share was received. The cost of reissuing the shares amounted to $100,000.

Required

a) Provide the journal entries necessary to account for the above transactions.

b) Provide the journal entry in the case Company S.A. would not be listed on the New Zealand Stock Exchange or not have any policy regarding refunds.

c) Explain the various possible outcomes when there is a forfeiture of shares due to nonpayment of amounts owing when a call is made.