A major retailing company, Mightier Ltd issued a prospectus on 1 August 2011 calling for...

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A major retailing company, Mightier Ltd issued a prospectus on 1 August 2011 calling for subscriptions for 8 million shares for a new class of share – Ordinary B issued at $4.50 on the following terms: ? first payment of $1.00 is to be made on application ? $1.50 is to be paid on allotment ? remaining amount is to be paid in one call within 3 months of allotment. Additionally, according to the company's constitution any surplus monies after a forfeiture of shares are returned to the original shareholders. Applications closed on 31st October 2011. By the end of October, when applications closed, applications for 9.5 million shares were received. The shares are allotted on 15 November 2011 on a pro rata basis with the excess application money to be applied against the amount due on allotment and any calls and any further amounts remaininge are received on 1 December 2011. The first and only call on the shares is made on 15 January 2012. Call monies are received on 15 February 2012 from all shareholders except from the holders of 50,000 shares who did not pay the final call. The Directors decide that these shares are forfeited and are to be reissued. On 1 March 2012, the 50,000 shares are forfeited. One week later the shares are reissued as fully paid to a new shareholder for a receipt of $4 per share. Costs of reissue amount to $100 and any balance in the forfeited shares account is refunded to the original shareholder as per the company’s constitution. Prepare journal entries to record the above events. Narrations are required

David · Accepted Answer

The following information is extracted from the accounts of Mightier Ltd (Also see the separate 
spreadsheet)
General administration expenses for the year ended 30 June 2012 include the 
following, among other items:
 Donations  $125,500  
 Entertainment expenses  $43,000  
 Research and development costs  $1,270,000
Operating expenses for the year ended 30 June 2012 include the following, among 
other items:
Long Service leave Expense     $391,111  
Doubtful Debts Expense     $374,450  
Service fees     $602,321
Additional information:
 Depreciation on PPE for tax purposes for 2012     $2,212,890  
 Accumulated depreciation on PPE for tax at 30/06/2012     $9,433,448  
 Tax base of Trademarks and Patents is     $12,058,293  
 The amortisation expense for trademarks and patents during the year was 
$1,650,421. However, the amortisation for tax purposes for the year was 
$1,

A major retailing company, Mightier Ltd issued a prospectus on 1 August 2011 calling for subscriptions for 8 million shares for a new class of share – Ordinary B issued at $4.50 on the following...

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