QUESTION 1

On 1 November 2019, Pink Ltd issued a prospectus inviting applications for 200 000 ordinary shares to the public at an issue price of $4, payable as follows:

$2 on application (due by closing date of 1 February 2020)

$1 on allotment (due 31 March 2020)

$1 on future call/calls to be determined by the directors

By 1 February 2020, applications had been received for 250 000 ordinary shares of which applicants for 100 000 shares forwarded the full $4 per share and the remainder forwarded only the application money.

At a directors' meeting on 15 February 2020, it was decided to allot shares in full to applicants who had paid $4 on application, to reject applications for 10 000 shares and to proportionally allocate shares to all remaining applicants. According to the company's constitution, all surplus money from application can be transferred to Allotment and/or Call accounts. Share issue costs of $3 000 were also paid on 15 February 2020. All outstanding allotment money was received by 31 March 2020.

The call for $1 was made on 1 July 2020 with money due by 1 September 2020. All money was received by the due date.

Required:

Prepare the journal entries to record these transactions of Pink Ltd.

QUESTION 2

On 1 March 2020, Black Ltd was registered and offered 500 000 ordinary shares to the public at an issue price of $6, payable as follows:

$3 on application

$2 on allotment

$1 on final call

The share issue was successful, and all the allotment money was received by the due date. The final call was made on 1 November with money due by 30 November. All money was received on the due date except for the holder of 15 000 shares who failed to meet the final call.

On 7 December 2020, as provided for in the constitution, the directors decided to forfeit these shares. They were reissued, on 15 December 2020, as paid to $6 for $5.6 cash. Costs of forfeiture and reissue amounted to $4 000 and was paid on the same day. The balance of the Forfeited Shares account was returned to the former shareholder on 31 December 2020.

Prepare the journal entries to record these transactions

QUESTION 3

On 1 January 2019, White Ltd issued 300 000 options, at an issue price of 50c per option. Each option allows the holder to subscribe for one ordinary share at an exercise price of $2.50 per share on or before 1 June 2020. By 1 June 2020, 280 000 of the options issued were exercised and shares were issued. The remaining options lapsed.