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 allotment will include:
A)a debit to Cash.
B)a debit to Ordinary share capital.
C)a credit to Application.
D)a debit to Trust bank account.

Question

Quizplus · Accepted Answer

The allotment payment is received in cash, so the journal entry will include a debit to Cash to record the receipt of funds.

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