Laura Ltd is listed on the ASX. It has 3 million shares issued at a price of $5.50 per share. The investors were required to pay $2.00 on application and $1.00 on allotment. Both these amounts were paid in full. A first and final call of $2.50 was made and was due on 28 August 2021. At the end of October 2021, the directors of the company elect to forfeit 50 000 shares on which the holders have failed to pay the call. Laura Ltd reissues the shares fully paid up for a price of $4.75 and incurred costs of $1,500. What are the entries required to forfeit the shares, reissue the shares, and make a refund if appropriate?

Group of answer choices

a. Forfeit the shares

Dr Share capital 275 000 Cr Call 125 000 Cr Forfeited shares liability 150 000

Reissue the shares

Dr Cash 237 500 Dr Forfeited shares liability 37 500 Cr Share capital 275 000

Dr Forfeited shares liability 1 500 Cr Cash 1 500

Refund the shares

Dr Forfeited shares liability 111 000 Cr Cash 111 000

b. Forfeit the shares

Dr Share capital 150 000 Cr Forfeited shares liability 150 000

Reissue the shares

Dr Cash 87 500 Cr Share capital 87 500

Dr Forfeited shares liability 1 500 Cr Cash 1 500

Refund the shares

No entry required

c. Forfeit the shares

Dr Share capital 150 000 Cr Forfeited shares liability 150 000

Reissue the shares

Dr Cash 87 500 Cr Share capital 87 500

Dr Forfeited shares liability 1 500 Cr Cash 1 500

Refund the shares

Dr Forfeited shares liability 148 500 Cr Cash 148 500

d. Forfeit shares

Dr Share capital 275 000 Cr Call 125 000 Cr Forfeited shares liability 15 000

Reissue the shares

Dr Cash 237 500 Dr Forfeited shares liability 37 500 Cr Share capital 275 000

Dr Forfeited shares liability 1 500 Cr Cash 1 500

Refund the shares

No entry required

Question 2

On 1 February 2021, Xland Ltd borrowed $150,000 (at an interest rate of 12% p.a.) to finance the construction of its power plant. This loan was repaid on 30 June 2021. The construction of the plant began on 1 February and it was completed on 31 May 2021. Can we capitalise the borrowing cost as part of the cost of the plant?

Group of answer choices:

a. No, as the borrowing cost was incurred for a non-qualifying asset

b. Yes, as the borrowing cost was incurred for a qualifying asset

c. Yes, and to be capitalised for the tenure of the construction

d. No, as the construction did not take a substantial period of time to complete to qualify

Question 3

Blum Ltd was registered as a company on 1 Dec 2020. On 8 Dec 2020, Blum Ltd issued a prospectus offering 200 000 ordinary shares at an issue price of $5.00 each, payable $4.00 on application and $1.00 on allotment. Applications closed on 1 March 2021 with the company having received applications for 220 000 shares. After application but prior to allotment, the balance in the application account would be:

Group of answer choices:

a. $880 000 debit

b. $980 000 debit

c. $880 000 credit

d. $980 000 credit

Question 3

Balibaba Ltd’s share capital consists of 50 000 ordinary shares issued at $2 and paid to $1 per share. On 1 September, a first call of 50c was made on the ordinary shares. By 5 October, call money was received on 45 000 shares. On 6 November, the shares on which calls were outstanding were forfeited. The company’s constitution provided for any surplus on resale to be retained as reserves whose shares were forfeited. The entry to record the forfeiture of shares is:

Group of answer choices:

a. Dr. Share capital 7 500, Cr. Forfeited shares reserve 7 500

b. Dr. Share capital 7 500, Cr. First call — ordinary shares 5 000 ,Cr. Forfeited shares liability 2 500

c. Dr. Share capital 7 500, Cr. First call — ordinary shares 2 500, Cr. Forfeited shares reserve 5 000

d. Dr. Share capital 7 500, Cr. First call — ordinary shares 2 500, Cr. Forfeited shares liability 5 000

Question 4

Bullion Ltd makes a 1-for-4 rights issue to its 'C' ordinary shareholders. The rights allow holders to obtain 'C' ordinary shares for $3.20 per share payable in full on application. The holders of 44 000 'C' ordinary shares accept the rights offer by the expiry date. The shares are duly allotted and all money is received. What are the general journal entries to record these transactions?

Group of answer choices:

a. Dr. Cash 140 800 Cr. Share capital: 'C' ordinary shares 140 800

b. Dr. Share capital: 'C' ordinary shares 140 800 Cr. Cash 140 800

c. Dr. Share capital: 'C' ordinary shares 35 200 Cr. Cash 35 200

d. Dr. Cash 35 200 Cr. Share capital: 'C' ordinary shares 35 200