- 15 Marks
FA – Nov 2013 – L1 – SB – Q5 – Partnership Accounts
Preparation of journal entries for share issue, forfeiture, and reissue transactions.
Question
Mosafejo Plc issued 200,000 Ordinary Shares of N1.00 each at N1.40 per share, payable as follows:
(i) 35 kobo on application
(ii) 65 kobo on allotment (including premium)
(iii) 40 kobo on first and final call
All the monies were received on due dates except for 20,000 shares not paid on first call. The holders of these shares failed to pay up, and after some reminders, the shares were forfeited. The shares were re-issued at 75 kobo per share, and all the monies received.
You are required to:
(a) Draw up journal entries to record the above transactions.
(11 Marks)
(b) The Share Premium Account may be used in certain circumstances. List any TWO circumstances in which the Share Premium Account may be used.
(4 Marks)
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