Question

In: Accounting

During its first year of operations, Moon Ltd invited the public to subscribe to the issue...

During its first year of operations, Moon Ltd invited the public to subscribe to the issue of 18,100 shares
for $10 per share:         
$4.70 payable on application       
$3.00 on allotment        
Applications closed and shares were allotted on 1 July. All allotment money was received by 31 July.  
The remaining capital of $2.30 per share is called on 1 December and all call money was received by 31 December.
Required
Journalise the transactions to record:
a) the application by investors
b) the allotment of shares on 1 July and the receipt of allotment money received by 31 July.
(Enter debit entries first followed by credit entries.Please include Dr and Cr as appropriate. Narrations are not required).

Solutions

Expert Solution

The Journal entries to be passed for part a) and part b) are given below:

Date Journal Entry and Narration & Explanation Debit Credit
a) Bank a/c                                                                                                                                    Dr. $     85,070.00
To Share Application a/c $      85,070.00
(Being application money received on 18,100 shares at $4.70 per share)
b) 1-Jul Share Application a/c Dr. $     85,070.00
To Share Capital a/c $      85,070.00
(Being the transfer of application money on 18,100 shares to share capital account on allotment)
b) 1-Jul Share Allotment a/c Dr. $     54,300.00
To Share Capital a/c $      54,300.00
(Being the amount due on 18,100 share at $3.00 per share)
b) 31-Jul Bank a/c                                                                                                                                      Dr. $     54,300.00
To Share Allotment a/c $      54,300.00
(Being allotment amount received)

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