Rippa Ltd was incorporated on 1 July 2017. The followingtransactions and events occurred during the year ended 30 June2018:

1 Jul 2017: Rippa Ltd makes an offer to the public for investorsto subscribe for 5,000,000 shares, at an issue price of $4.00 pershare, with $2.50 payable on application, $1.00 being payablewithin one month of allotment, and $0.50 payable on a call to bemade at a later date. The issue is underwritten at a commission of$12,000.

31 Jul 2017: Applications close, with applications received for6,000,000 shares.

10 Aug 2017: 5,000,000 shares are allotted in proportion to thenumber of shares for which applications had been made. The surplusapplication money is offset against the amount payable onallotment.

12 Aug 2017: The underwriter’s commission is paid.

10 Sep 2017: All allotment money is received.

1 Feb 2018: The call is made, with money due by 28 February2018.

28 Feb 2018: All call money is received except for holders of40,000 shares who fail to meet the call.

20 Mar 2018: The shares on which call money was not received areforfeited and sold as fully paid. An amount of $3.20 is receivedfor each share sold. Costs of the forfeiture and reissue amount to$4,000, and are paid.

25 Mar 2018: The balance of the Forfeited Shares Account isreturned to the former shareholders.

Required:

i) Prepare thejournal entries to record the transactions of Rippa Ltd up to andincluding that which took place on 25 March 2018. Show all relevantdates and narrations.

ii) After returning money to the former shareholders on 25 March2018, one of the former shareholders has contacted you in relationto the amount of money that he received. He tells you that he paidthe application money and allotment money for the shares that hehad, so he should get an amount back of $3.50 per share. Explainwhy the amount returned to the former shareholders was not $3.50per share, and prepare workings to show how the refund per sharewas calculated.