On 1 July 2017, Pine Ltd issued a prospectus inviting applications for 600 000 o

Question

On 1 July 2017, Pine Ltd issued a prospectus inviting applications for 600 000 ordinary shares, at an issue price of $7, payable $2.50 on application, $1.50 on allotment, and $3 on future call(s), dates to be determined by the directors. By 1 September, applications were received for 620 000 shares with $2.50 paid per share. On 6 September, the directors allotted 600 000 shares. Refunds were made to applicants for 20 000 shares. Share issue costs of $12 400 were also paid on the same date. All of the allotment money was received by 1 October. On 1 February 2018, a first and final call for $3 was made. All of the call money was received by 1 March 2018.

Required

Prepare journal entries to record the above transactions.

Explanation / Answer

journal entries

date accounts debit $ credit $ 01/09/2017 bank a/c dr 1,550,000 to share application a/c 1,550,000 06/09/2017 share application a/c dr 1,500,000 to share capital a/c 1,500,000 06/09/2017 share application a/c dr 50,000 to bank 50,000 06/09/2017 share allotment a/c dr 900,000 to share capital a/c 900,000 01/10/2017 bank a/c dr 900,000 to share allotment a/c 900,000 1/2/2018 share first and final calls a/c dr 1,800,000 to share capital a/c 1,800,000 1/3/2018 bank a/c dr 1,800,000 share first and final calls 1,800,000

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