Reference no: EM132873197

Question - On 1 August 2020 Apple Ltd issues 50,000 shares at $1.00. The terms of the issue requiring the shareholders to pay $0.60 immediately with the balance due in one year's time. In one year's time, the company makes a call on the shareholders for the remaining $0.40 per share, with payments to be made by 31 August 2021. Holders of 49,000 shares pay the required call by 31 August 2021. On 5 September, the company forfeits the shares on which the call was not paid.

Required -

1. Prepare the journal entries required to record the above transactions (ignore narrations).

2. The forfeited shares were reissued on 5 November 2021 as fully paid to $1.00 on payment of $0.80 per share, with the forfeited shares account being used to fund the difference as well as any costs of reissue. Assuming all the shares were reissued, incurring costs of $150, and any balance of the forfeited shares account being returned to the former shareholders, Prepare the necessary journal entries to reflect these events (ignore narrations).

3. If a company used a direct private placement for issuing shares rather than a public placement, briefly explain how this would change the accounting for the share issue.