Reference no: EM132818235

On 1 July 2019, Willma Ltd was registered and, through a public issue on 31 August 2019 the share capital was as follows; 50,000 preference shares, and 75,000 ordinary shares, the issue price of the shares is as follows:

1. $4 each for the preference shares paid to $2.00 on application.
2. $5 each for the ordinary shares paid to $2.00 on application.

• On 31 August 2019, a further call of $3.00 on ordinary shares and $2.00 on preference shares was made and were duly received by 30 September 2019, except those on 2,000 preference shares. which were forfeited as at 30 September 2019.
• At a director's meeting on 30 October 2019, it was decided to bring the capital back to the original amount issued, therefore, the forfeited shares were were sold at a price of $3.50 per share paid to 5.00 and the transfer was completed on 31 December 2019. According to the company's constitution, shareholders equity in forfeited shares must be refunded to them. On 31 December 2019, the previous owners of the forfeited shares received a refund cheque for the amount due, less selling costs of $1,520.

Required:

Problem 1: Prepare the journal entries to record the above transactions of Willma Ltd from when the call was made (Show all workings and dates, narrations are not required).