Page 34 - Ebook Financial Accounting 3

Example 2.4

Samudera Bhd was incorporated on 1st January 2021, and it offer for subscription an initial
offering of 500,000 ordinary shares at a price of RM1.20 per shares on the following term:

1/2/21 On application RM0.40
1/3/21 On allotment RM0.40

1/4/21 On call RM0.40

Applications were received for 800,000 shares and the directors decided to deal with it as
follows:

• To refund the application money for 50,000 shares which were not accepted.
• To allot the remainder on a pro rata basis.

All the shareholders paid the money on the due date except in the case of one holder of 5,000

ordinary shares, Andak, who paid the call money together with the allotment money. The other
shareholder of 10,000 ordinary shares, Inol, failed to pay the call money. After repeated notice

given to Inol, the directors decided to forfeit all the call-in arrears of 10,000 ordinary shares.

On subsequent date, the forfeited shares were reissued at fully paid shares at RM0.40 each. The
ordinary shares were fully subscribed and fully paid.

Required:

Show the necessary journal entries and prepare the extract statement of financial position after
reissuance of forfeited share

ANSWER
Item Dr Cr

(RM,000) (RM,000)

Bank 320,000
Application 320,000

(Being money received for 800,000 shares x 40 cent)

Application 200,000

Ordinary Share Capital 200,000
(Being application money transferred to share capital

500,000 shares x 40 cent)

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