Share issues, options, statement of changes in equity

On 30 June 2022, the equity accounts of Yabby Ltd consisted of:

180000 ordinary shares, issued at $2.50 each, fully paid	$	450000
Options (80000 at 75c each)*		60000
General reserve		50000
Forfeited shares reserve		4000
Retained earnings		95000

*The options were exercisable between 1 May 2023 and 31 May 2023. Each option allowed the holder to buy one ordinary share for $3 each.

Required

1. Prepare general journal entries, including any closing entries required, to record the following transactions that occurred during the year ended 30 June 2023.

• The final 6c per share dividend for the year ended 30 June 2022 was paid on 27 September 2022. Shareholder approval to pay the dividend had been obtained at the annual general meeting on 20 September.
• On 1 October, the directors issued a prospectus offering 60000 ordinary shares at an issue price of $2.80, payable $2 on application and 80c as a future call. The closing date for application was 31 October 2022. The share issue was underwritten by Support Stockbrokers for a fee of $5000, payable on 15 November 2022.
• By 31 October 2022, applications for 75000 shares had been received.
• On 5 November 2022, the directors allotted the shares pro rata, with applicants receiving 80% of their requested shares. The companys constitution allows excess application monies to be retained and used to offset future calls payable.
• On 15 November 2022, the underwriting fee was paid.
• On 31 December 2022, the directors announced an interim dividend of 3c per share payable in cash on 1 February.
• To raise funds for expansion, the directors sold a parcel of 65000 ordinary shares to Iron Jays Finance on 28 April 2023 at an issue price of $2.80 per share.
• By 31 May 2023, the holders of 65000 options had indicated that they wished to purchase shares. On 2 June 2023, 65000 ordinary shares were issued with monies being payable by 21 June. Options not exercised duly lapsed.
• All outstanding monies were received with respect to shares issued to option holders.
• Profit for the year was $152 380. On 30 June 2023, the directors decided to:

• transfer $40000 to the general reserve
• declare a final 10c per share dividend. Shareholder approval for this dividend will be sought at the annual general meeting in September 2023.

2. Prepare a statement of changes in equity for the year ended 30 June 2023.
3. Yabby Ltd has recognised a Forfeited Shares Reserve as part of equity. Explain how and why such a reserve would be created.