The notice shown below appeared in the Financial News on 1 October 2017.

ARGAN NL

Notice of Sale of Forfeited Shares

All shares on which the call of fifty cents per share, due for payment on 1 September 2017, remains unpaid, will be sold by public auction on 1 November 2017, at 11 a.m. at the Australian Securities Exchange, Sydney, NSW.

Assume the following:

1 000 000 shares were forfeited

the forfeited shares were all paid to $1.50 per share

all the shares were sold at the auction for $1.80 per share and will be credited to $2.00

costs of forfeiture and reissue amounted to $4000

the balance of the Forfeited Shares account will be refunded to the former shareholders.

Required

Discuss the benefits to a company from forfeiting and reissuing shares, and prepare journal entries to record the forfeiture and reissue above.