Question - Dropchat Limited invited applications for 6 million equity shares of $2.75 each payable as follows:
- $0.50 per share on application
- $1.50 per share on allotment
- $0.75 per share on final call
On 30/9/2016, applications were received for 24,000,000 million shares (that is, 18,000,000 million in excess of the number of shares on offer).
Dropchat's constitution allows the company to apply any excess monies received to satisfy future amounts payable. Therefore, the board of directors decide to make a 1:4 pro-rata allotment of the shares applied for to every applicant. This means that applicants received one share for every 4 they applied for.
The shares were issued on 1/12/2016. The call for final payment being payable on 9/1/2017.
Shareholders of 800,000 shares, who failed to pay by the due date for the final payment, were refunded for the paid-up balance on 15/3/2017.
The unpaid partly paid shares were auctioned to existing shareholders on 1/3/2017. 600,000 shares were taken up at $0.75 per share.
Required:
1. Record the total value of applications for shares made in the books of the company.
2. Record the allotment of shares.
3. Journalize the offset of excess funds.
4. Record the transfer of application monies into the company's bank account.
5. Record the receipt of the call.
6. Journalize the forfeiture of the unpaid shares.
7. Record the receipt of payment for the auctioned shares.
8. Record the refund paid to the defaulting shareholders.