Question 2

Union Ltd is an internet provider that is listed under the Australian Stock Exchange. It is planning to raise some capital for an expansion scheme. On 1 July 2020, Union Ltd issued a prospectus, offering 1,000,000 ordinary shares at $4.00 with $2.00 due on application by 30 September 2020, $1.50 due within one month of allotment, and $0.50 due on a call to be made by the directors at a later date.

By 30 September 2020, the company had received applications for 1,100,000 ordinary shares. On 15 October 2020, the ordinary shares were allotted to applicants on a pro-rata basis, and the excess application money was retained and credited against amounts due on allotment. All allotment money was received by 15 November 2020.

The directors made the call on the ordinary shares on 10 January 2021, with amounts due by 10 February 2021. By this date, amounts due on 900,000 ordinary shares had been received. On 15 February 2021, the shares on which call money had not been received were forfeited and sold as fully paid. An amount of $3.20 was received for each share sold. Costs of the forfeiture and reissue amounted to $8,000 and were paid. The constitution allows for the refund of any balance in the forfeited shares account after reissue to former shareholders, so refunds were made on 28 February 2020.

Required:

Prepare the journal entries to record the transactions of Union Ltd up to and including that which took place on 28 February 2020. Show all relevant dates, narrations and workings.