Reference no: EM132626423

Accounting for share issue On June 30 2018, Cramer Ltd had 500,000 ordinary shares on issue and share capital of $6,500,000. On August 15th 2018, Cramer Ltd issued a prospectus inviting the public to apply for 100,000 ordinary shares with an issue price of $12 each, payable $5 on application, $5 on allotment and $2 on call. Applications were to be received by September 10th, 2018. By the due date, applications had been received for 120,000 shares.

Situation 1: On September 25th 2018, 100,000 shares were allotted and the excess application money was refunded. Allotment money was due by October 10th, 2018 and by that date; all outstanding amounts had been received. On January 5th, 2019, a call was made for the final $2 owing on the shares. By the due date of March 10th 2019, call money had been received for only 90,000 shares. The 10,000 shares on which the call money was not paid were cancelled on May 5th 2019. These shares were reissued on May 15th 2019 at $10.00 each and the defaulting shareholder was given a refund.

Situation 2: On September 25th 2018, 100,000 shares were allotted and the excess application money was retained and transferred into Allotment. Allotment money was due by October 10th 2018 and by that date; all outstanding amounts had been received. On January 5 th 2019, a call was made for the final $2 owing on the shares. By the due date of March 10th 2019, call money had been received for only 90,000 shares. The 10,000 shares on which the call money was not paid were cancelled on May 5th 2019. These shares were reissued on May 15th 2019 at $10.00 each and the defaulting shareholder was given a refund.

Problem a. Make general journal entries to record the above transactions of Cramer Ltd for both Situation 1 & Sistuation 2

Problem b. How much is total equity for Cramer Ltd as at 30th June 2019