Answer Happy

Diary Ltd co. placed its share capital of 1 million divided into
equity shares of Kshs. 10 each for public subscription. The amount
was payable in installments as under:
Kshs. 2 on application per share
Kshs. 2.50 on allotment per share
Kshs. 3 on 1st call.
Kshs. 2.50 on 2nd and final call per share applications were
received for 180,000 shares which were allotted on 1st August 2007
as under:
i) To the applicants of 90,000 shares – full allotment
. ii) To the applicants of 40,000 shares – 25% allotted.
iii) The rest of the applications were rejected due to technical
defects and money refunded to the applicants.
First call was made on 1st November 2007 while the second call
was made on 1st February 2008.
According to the terms of issue, the surplus application money
could be kept by the directors for use against money due to
allotment and subsequent calls.
One shareholder to whom 10,000 shares were allotted failed to
pay first call money and on his failure to pay second call money,
his shares were forfeited 7,000 of his forfeited shares were
re-issued at a fully paid price of Kshs. 8 per share.
Required:
i) Journal entries to record the above transactions. (10
marks)
ii) Bank account. (3 marks)
iii) Balance sheet extract. (5 marks)