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QUESTION 3 20 MARKS

TeleMobile Communications Ltd is an unlisted company and has been operating for a number of

years. At the beginning of the 20X8/X9 financial year it decided to raise further capital from the

public. As a result it issued a prospectus for 5,000,000 shares. The offer was oversubscribed with

applications for 8,755,000 shares received. All applications paid only the application amount and

the required 5,000,000 shares were issued. Shares were issued in proportion to their applications.

A First Call was made on the shares on 1st January 20X9. The general ledger T accounts below

provide the details of the issue and the call.

On 1st March 20X9 the decision was made to forfeit the shares of the shareholders who did not pay

the Call. Those shares were then offered to another single shareholder at price of $4.80/share but

paid to the amount of the other shares. This single shareholder accepted the offer and paid the

amount on 15th March 20X9 and the costs associated with the forfeiture and re-issue were $6,755.

The forfeited shareholders received refunds of the remaining amounts on 31st March 20X9.

REQUIRED

Prepare general journal entries with narrations to record all the transactions dealing with the share

forfeiture, subsequent share reissue and payment to forfeited shareholders. Narrations are

required.

PLEASE NOTE - This is a difficult question and requires care in determining the correct amounts

and factors. A hint is to fully reconstruct all the transactions in relation to the share issue