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Super Pizzas Ltd has two transactions related to equity that are yet to be recorded:...

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Question

Accounting

Super Pizzas Ltd has two transactions related to equity that are yet to be recorded:

(a) On 3 August 2021, Super Pizzas Ltd issues 4,000 shares to employees for $2.50 per share. The employees promise to pay for the shares in the near future. These shares were previously acquired from investors by the company at $6.10 per share. Note that a company is permitted to hold a small proportion of its own shares as treasury stock.

(b) On 10 September 2021, Super Pizza Ltds board of directors cancels 9,000 shares held by investors who failed to respond to a recent call. The shares had been issued at $4.75 per share including $2.00 per share on call.

Required:

Prepare journal entries for sale of treasury stock and the forfeiture of shares after a call.

Super Pizzas Ltds General Journal:

Date

Account Names

Debit

Credit

3/8/2021

(To record sale of treasury stock to employees)

10/9/2021

(To record cancellation of shares from investors who did not respond to the call)

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