Question 1(20 marks)

On 1 July 2018 Jacob Ltd issued a prospectus to the public offering 10 million shares at $1.50 each. The prospectus specified that $0.60 per share is payable on application and a further $0.40 will be payable on allotment. The closing date for applications was 31 August 2015.

By the closing date, applications have been received for 14 million shares. To deal with the oversubscription, the directors of Jacob Ltd decided to issue shares to all subscribers on a pro rata basis. Excess money received on application will be creditedagainst the amounts due on allotment.

All amounts due on allotment are paid by the due date of 15 September 2018.

On 30 November 2018, Jacob Ltd made the call for the outstanding balance of $0.50 per sharewith the amounts being payable by 31 December 2018. Holders of 2 million shares fail to pay the amount due of the call by the due date, and on 15 January 2019 the directors forfeited the shares. The forfeited shares were cancelled and reissued on 15 February 2019 as fully paid to $1.50 on payment of $1.20 per share. The reissue of the forfeited shares cost $6000. The balance in the forfeited shares account were refunded to the forfeited shareholders by 28February 2019.

REQUIRED

Prepare general journal entries to record the above transactions. Show all workings.