On 1 April 2019, Magnolia Ltd was incorporated and a prospectus was issued inviting applications for XXXXXXXXXXshares, at an issue price of $10, payable $5 on application, $2.50 on allotment and $1.25...

1. On 1 April 2019, Magnolia Ltd was incorporated and a prospectus was issued inviting applications for 100000 shares, at an issue price of $10, payable $5 on application, $2.50 on allotment and $1.25 on calls to be made after the date of allotment.

By 30 April, applications were received for 120 000 shares. On 3 May, the directors allotted 100 000 ordinary shares to the applicants in proportion to the number of shares for which applications had been made. The surplus application money was offset against the amount payable on allotment. The balance of the allotment money was received by 10 May. Share issue costs of $800 were also paid on the same date.

The calls were made on the dates stated in the prospectus, but the holders of 15 000 shares did not pay call.

On 10 March 2017, as provided by the company’s constitution, the directors forfeited the 15 000 shares on which calls were unpaid. The constitution does not provide for refund of any balance in the forfeited shares account after reissue to former shareholders.

Instructions:

Prepare the Journal entries for Magnolia Ltd