Malaysia Company Ltd decided to issue 200 000 ordinary shares for $2.10c each, payable in instalments, 40c on application, $1 on allotment and the balance payable at the discretion of the company. Applications were received for 220 000 shares. The shares were allotted by the directors at a meeting held a week after the close of applications and refunds were made for 20 000 shares. The journal entry to record the full receipt of the allotment instalment is which of the following?

Question

Quizplus · Accepted Answer

The correct journal entry to record the full receipt of the allotment instalment for the 200,000 shares allotted at $1 each is to debit the bank account for $200,000 (200,000 shares * $1) and credit the allotment account for $200,000. This reflects the cash received from shareholders for the allotment of shares.

Malaysia Company Ltd Decided to Issue 200 000 Ordinary Shares