On 1 April 2011, Paprika Ltd was incorporated and a prospectus was issued inviting applications for 100,000

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On 1 April 2011, Paprika Ltd was incorporated and a prospectus was issued inviting applications for 100,000 shares, at an issue price of $10, payable $5 on application, $2.50 on allotment and $1.25 on each of two calls to be made at a later date.
By 30 April, applications were received for 120,000 shares. On 3 May, the directors allotted 100,000 shares to the applicants in proportion to the number of shares for which applications had been made. The surplus application money was offset against the amount payable on allotment. The balance of the allotment money was received by 10 May. Legal costs of forming the company were $1,300 and were paid on 11 May. Share issue costs of $800 were also paid on the same date.
The two calls were then made on 1 September 2011 and 1 January 2012 respectively, but the holders of 10,000 shares did not pay either call. In addition, a holder of another 5,000 shares did not pay the second call. All call monies are due at the end of the month it is called. On 10 March 2012, as provided by the company's constitution, the directors forfeited the 15,000 shares on which calls were unpaid.
On 25 March 2012, the forfeited shares were reissued as fully paid for a consideration of $9 per share. Costs of forfeiture and reissue amounted to $250. The constitution does not provide for refund of any balance in the forfeited shares account after reissue to former shareholders.
Required: (a) Prepare ledger accounts to record the above transactions.
(b) Prepare the equity section of Paprika's statement of financial position as at 25 March 2012, immediately after the completion of the above transactions.
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Accounting

ISBN: 978-1118608227

9th edition

Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett

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