Use the following information to answer questions 57-58.
Minosh Corp. is authorized to issue 400,000 no par value common shares. Subscribers agree to purchase shares at $ 12 per share with a 30% down payment.
-Assume that subscribers agree to purchase 75,000 shares and make the required down payment. The journal entry to record receipt of the subscriptions includes a
A) debit to Common Shares Subscribed for $ 900,000.
B) credit to Common Shares Subscribed for $ 900,000.
C) credit to Common Shares for $ 270,000.
D) credit to Subscriptions Receivable for $ 670,000.

Question

Quizplus · Accepted Answer

Since subscribers have made a down payment, the company has received $ 900,000 (75,000 x $ 12). Therefore, the journal entry should include a credit to Common Shares Subscribed for $ 900,000. The company should not credit Common Shares or Subscriptions Receivable at this time as the shares have not been fully issued and the remaining balance is not yet due.

Use the Following Information to Answer Questions 57-58