Question

On 1 November 2019, Pink Ltd issued a prospectus inviting applications for 200 000 ordinary shares to the public at an issue price of $4, payable as follows:
$2 on application (due by closing date of 1 February 2020)
$1 on allotment (due 31 March 2020)
$1 on future call/calls to be determined by the directors
By 1 February 2020, applications had been received for 250 000 ordinary shares of which applicants for 100 000 shares forwarded the full $4 per share and the remainder forwarded only the application money.
At a directors’ meeting on 15 February 2020, it was decided to allot shares in full to applicants who had paid $4 on application, to reject applications for 10 000 shares and to proportionally allocate shares to all remaining applicants. According to the company’s constitution, all surplus money from application can be transferred to Allotment and/or Call accounts. Share issue costs of $3 000 were also paid on 15 February 2020. All outstanding allotment money was received by 31 March 2020.
The call for $1 was made on 1 July 2020 with money due by 1 September 2020. All money was received by the due date.

Required:
Prepare the journal entries to record these transactions of Pink Ltd.

Answer 1

All the journal enrtries are done date wise with explanation,

There are four working notes, please follow them to understand the adjustment and amounts recorded in the journals.