Question 1: ABC issued a prospectus for the issue of 100,000 $5 shares on 1 January 2016. The prospectus specified that: $2.50 was payable on application Further $1.25 was payable on allotment The final $1.25 was payable at call On 31 January 2016, ABC received applications for 110 000 shares. ABC issued all of the 100,000 shares on a pro-rate basis and refunded the excess money to the shareholders. All the money owed on allotment was received by 1 March 2016. On 31 May 2016, the company made the call for the outstanding balance of $1.25 per share. The call was payable by 30 June 2016. At 30 June 2016, the call on 10,000 shares remained unpaid. On 1 July 2016 the directors of ABC decided to forfeit the 10,000 shares in respect of which the call of $1.25 was not made. The shares were cancelled and reissued as fully paid to $5 per share on payment of $4 per share. Costs of $1500 were incurred to reissue the shares. The balance of the forfeited shares account was returned to the shareholder. Required: Show journal entries to implement the above transactions. (Show all workings and dates but narrations are NOT required). Note that in this solution, narrations are provided for your understanding. Date Account Debit Amount Credit Amount