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

The journal entry to record the cash received on application would be to credit the application account, as the money is being received as payment towards the application price. Therefore, the correct choice is C - Cr Application, $110 000. A is incorrect, as it would be the entry to record the receipt of the entire share capital amount, not just the application money. B is incorrect, as it would be the entry to record the issuance of shares, not the application money. D is incorrect, as it would be the entry to record the application money being paid to the company, not received from shareholders.

An Issue of 50 000 Shares at $3 Required $2