Q.10. Share capital of Tomato Ltd at 31 March 2017 was as follows: 100,000 ordinary shares at an issue price of $4 each paid to $2. `At that date, a further call of $2 on ordinary shares was made. During the 3 months to 30 June 2017, all calls were duly received except those on 5000 ordinary shares which were forfeited as at 30 June 2017. To bring capital back to the original amount of issued capital, the forfeited shares were offered to an investment company at a price of $3.50 per share paid to $4 and the transfer was completed on 30 September 2017. According to the company’s constitution, shareholders’ equity in forfeited shares must be refunded to them. On 31 October, the previous owner of forfeited shares received a refund cheque for the amount due, less selling costs of $720. Required Show journal entries to implement the above transactions.

Q.10. Share capital of Tomato Ltd at 31 March 2017 was as follows: 100,000 ordinary shares at an issue price of $4 each paid to $2. `At that date, a further call of $2 on ordinary shares was made. During the 3 months to 30 June 2017, all calls were duly received except those on 5000 ordinary shares which were forfeited as at 30 June 2017. To bring capital back to the original amount of issued capital, the forfeited shares were offered to an investment company at a price of $3.50 per share paid to $4 and the transfer was completed on 30 September 2017. According to the company’s constitution, shareholders’ equity in forfeited shares must be refunded to them. On 31 October, the previous owner of forfeited shares received a refund cheque for the amount due, less selling costs of $720. Required Show journal entries to implement the above transactions.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 94.1C

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