Question
Equity transactions and adjustments, statement of changes in equity.
On 30 June 2013, the equity of Lilium Ltd consisted of:
25000 ordinary shares issued at $3, called to $2.50 $62 500
1500 ordinary shares, issued at $1.50, fully paid $2 250
Calls in arrears (1000 shares at 50c) $(500)
General reserve $12 500
Retained earnings $ 39 500
Total Equity $ 116 250
The company has recognized a liability of $10 000 in relation to 5000 8% redeemable preference shares, issued at $2 each and fully paid. These preference shares must be redeemed at 5% premium by 31 March 2014.
During the year ended 30 June 2014, the following events occurred.
1. By 31 July 2013 $300 of outstanding call money had been received.
2. On 7 August 2013 the directors forfeited those ordinary shares with calls outstanding. The company's constitution provides that no refund is made to the former shareholder.
Required:
Prepare general journal entries to record the above events.