Question 2

Titanic Ltd was incorporated on 1 July 2020. On 1 September 2020, Titanic Ltd issued a prospectus inviting applications for 3,500,000 shares, at an issue price of $3.00, payable as follows: $2.20 on application, $0.60 on allotment (payment due within 1 month of allotment) and $0.20 on a call to be made at a later date.

By 30 September 2020, applications had been received for 3,700,000 shares. On 10 October 2020, shares were allotted in proportion to the number of shares for which applications had been made. The surplus application money was returned to the applicants.

All allotment money was received by 10 November 2020.

The call was made on 2 January 2021, with all money due by 31 January 2021. All money owing in relation to the call was received by the due date, except for the holders of 50,000 shares who did not pay the call.

On 10 February 2021, as provided in the companys constitution, the directors forfeited these 50,000 shares. On 12 February 2021, the forfeited shares were reissued as fully paid for a consideration of $2.60 per share. Costs of forfeiture and reissue amounted to $5,000 which were paid on 18 February 2021. The constitution allows for the any balance in the forfeited shares account after deducting any losses or costs, to be retained by the company as reserve.

Required:

Prepare the journal entries to record the transactions of Titanic Ltd up to and including that which took place on 25 February 2021.

Question 2	Max. marks allocated
Journal entries	11.5
Dates of transaction	1.5
	13