Signal Ltd called for subscriptions for 8 million shares.The issue price per share is $3.50 to be paid in three parts: the first payment of $1.00 is to be made on application,$1.50 is to be paid within 1 month of allotment and the remaining $1.00 is to be paid within 3 months of allotment.At the end of July,when applications close,applications for 10 million shares have been received.The shares are allotted on 1 August on a pro rata basis with the excess application money to be applied against the amount due on allotment.The first and final call on the shares is made on 1October.Assume all amounts on allotment and call are paid by the due date.What are the accounting entries to record these events?

Question

Quizplus · Accepted Answer

C is the correct answer as it shows the correct accounting entries for all the events that occurred in the given scenario.

A is incorrect because it only records the application money received but not the allotment and call money.

B is incorrect because it only records the allotment money received and not the application and call money.

D is incorrect because it doesn't show the correct accounting entries for the excess application money received, which should be used to offset the amount due on allotment.

Signal Ltd Called for Subscriptions for 8 Million Shares