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QUESTION II

The discussion now swung towards the subject of the shareholder equity transactions which had occurred

during the year $[$these were briefly mentioned in Question I above$].$ Ms$.$ Jell suddenly fell silent and

began to be evasive toward offering you any further information. After several minutes of awkward

silence, she explained to you in a very low tone of voice, "You see we have just about no information

whatsoever on this transaction. I mean, we had recruited a great young accountant about $3$ months ago

and we were looking at a very promising career for him. However, he was sort of an outdoor type with a

flair for adventure. We warned him to be careful on this planet but alas, he ignored our advice. Ten days

ago, he went out for a jog on the Jupiter plains. It was a bit windy and foggy that day, and the young man

sort of disappeared into one of those black hole things. The rescue squad tried to locate him but alas to

no avail. Finally his beeper went beep, be $..$ ep$,$ be $..$ e $..$ e and then silent. Of course we do miss him at

times but honestly speaking, what we dearly miss is his backpack. It contained a lot of valuable files

which we are now desperately trying to reconstruct. This issue of new shares was one such file lost."

Upon some further questioning on your part, she provided what she knew in bits and pieces.

The $799,000$ outstanding common shares on January $1$ had been reported at an amount of

$$11,585,500.$

The additional $48,000$ common shares had been issued on February $1$ for cash at $$15\mathrm{.}50$ each.

EF $12,000$ common shares had been acquired on March $1.$ "Why did we buy the shares if all we did was

to cancel them right after acquiring them on the same day? I had opposed this acquisition till the

very last but what could I do against the insistence of the head office. We lost $$8,320$ on that deal,"

lamented Ms$.$ Jell.

On March $15,$ the company had issued subscriptions for some additional common shares. It received

$$1,530,000$ upon application at $$1\mathrm{.}80$ per subscription. Thereafter, the subscribers were required to

pay $$4\mathrm{.}00$ on March $31$ and the balance, being the final instalment, on April $30.$ The issue was fully

subscribed.

eF On March $31,$ subscribers for $10,000$ shares failed to pay the required instalment. The company

received the cash from all of the other subscribers. The defaulting subscribers forfeited the first

instalment paid.

E On April $30,$ the company received $$$8,400,000$ from the remaining subscribers and on May $1,$ it

issued shares to all subscribers in good standing.

Now you get to work on the second list of questions posed by Ms$.$ Jell.

Required:

Prepare journal entries, in proper format, to record all transactions listed below:

i$]$ the issue of shares on February $1.$

ii$]$ the acquisition and cancellation of the treasury shares on March $1.$

iii$]$ the entries required on March $15.$

iv$]$ the instalment $($and default$)$ on March $31.$

v$]$ the instalment on April $30.$

vi$]$ the issue of the shares on May $1.$

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