Use the information below to answer the following questions:
An issue of 50 000 shares at $3 required $2.20 per share to be paid at the time of application. On allotment, another $0.30 was due and a further $0.50 when determined by the board of directors. The application money in respect of the 50 000 shares was received on 8 July. On 26 July, the shares were issued with the amount due on allotment received on 15 August. The remaining $0.50 was called up on 20 September and received on 10 October.
-The journal entry to record the cash received on application would include:
A) DR Cash at bank,$110 000
B) CR Share capital,$110 000
C) CR Application,$110 000
D) DR Application,$110 000.

Question

Quizplus · Accepted Answer

When money is received on application, it is recorded as a liability under the account "Application". Therefore, the appropriate entry would be to credit the "Application" account for the full amount of $110,000. The entry would be:

DR Cash at bank $110,000
CR Application $110,000

Use the Information Below to Answer the Following Questions