Rainbow Berhad required funds for a feasible project which will be beneficial to both the company and its shareholders. Instead of issuing loan notes, the funding was to be through a share issue. The public was than invited to subscribe to 40,000 ordinary shares of Rainbow Berhad on the 24 January 2021. The full price of the share was RM12 each. The board of directors decided that on application RM4.50 should be paid on application, and then the applicants should pay the allotment of RM2.50 one week after the allotment. The balance of the share money will be on one call. On the 25 February 2021, application closed with the issue oversubscribed by 8,000 shares, and share issue cost was paid amounted to RM1,500. On 8 March 2021, the directors allotted the shares, and it was decided that the shares are to be allotted on a pro- rata basis. Any excess of the application money will be held by the company as part of the allotment. On 15 March 2021, all the allotment money was received. On the 25 June 2021, a call for the remainder of the share amount was made. The call money was promptly received on the 30 June 2021 except on 1,200 shares. Required: Prepare journal entries to record the above transactions.
Rainbow Berhad required funds for a feasible project which will be beneficial to both the company and its shareholders. Instead of issuing loan notes, the funding was to be through a share issue. The public was than invited to subscribe to 40,000 ordinary shares of Rainbow Berhad on the 24 January 2021. The full price of the share was RM12 each. The board of directors decided that on application RM4.50 should be paid on application, and then the applicants should pay the allotment of RM2.50 one week after the allotment. The balance of the share money will be on one call.
On the 25 February 2021, application closed with the issue oversubscribed by 8,000 shares, and share issue cost was paid amounted to RM1,500. On 8 March 2021, the directors allotted the shares, and it was decided that the shares are to be allotted on a pro- rata basis. Any excess of the application money will be held by the company as part of the allotment. On 15 March 2021, all the allotment money was received.
On the 25 June 2021, a call for the remainder of the share amount was made. The call money was promptly received on the 30 June 2021 except on 1,200 shares.
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