Peterson Company is issuing 4 000 ordinary shares, payable by instalments. Investors must pay $10 per share on application, $5 per share on allotment, and there will be a final call of $2 payable at a later date to be determined by directors. The journal entry to record the application will be:
A)debit Trust bank account, credit Application.
B)debit Cash, credit Ordinary share capital.
C)debit Cash, credit Allotment.
D)debit Application, credit Trust bank account..

Question

Quizplus · Accepted Answer

The correct journal entry to record the application is to debit the Trust bank account and credit the Application account, reflecting the receipt of cash for the share applications.

Peterson Company Is Issuing 4 000 Ordinary Shares, Payable by Instalments