Accounting for share issues and options Sunny Ltd is looking to expand its operations, and in order to do this, the company needs to increase equity. On 1 January 2016, Sunny Ltd offered 4,000,000 ordinary shares to the public at an issue price of $3.00 per share, with $2.00 payable on application, and $1.00 due within one month of allotment. The closing date for applications was 31 January 2016. Sunny Ltd offered an additional incentive to investors: shareholders who acquired more than 25,000 shares were allowed to purchase options at 50 cents each. These options allowed investors to acquire shares in Sunny Ltd at $3.10 each on or before 30 June 2016. By 31 January 2016, applications had been received for 4,500,000 shares and 40,000 options. On 12 February 2016, 4,000,000 shares and 40,000 options were allotted, and excess application money was refunded to unsuccessful applicants. All applicants who acquired options also received shares. All allotment money is received by 12 March 2016, except for holders of 5,000 shares who failed to meet the instalment. On 20 March 2016, the 5,000 shares were forfeited, and on 5 April 2016 they were auctioned as fully paid. An amount of $2.80 was received for each share sold. Share re-issue costs amounted to $1,400, and were paid. The constitution provided for any surplus on resale, after satisfaction of unpaid instalments and any costs, to be returned to shareholders whose shares were forfeited. By 30 June 2016, the price of each of Sunny Ltd’s shares was $3.40. Holders of 30,000 options exercised their options in June 2016, with the remaining options lapsing. Required: Prepare the journal entries to account for the above entries. Show all relevant dates, narrations and workings. Question 2 Max. marks awarded Journal entries 10 Dates 3 Workings 2 Total 15