XYZ Ltd was registered as a company on 1 July 2017. On 4 July 2017, ABC Ltd issued a prospectus offering 200 000 ordinary shares at an issue price of $5.00 each, payable $3.00 on application and $2.00 on allotment. Applications closed on 1 August 2017 with the company having received applications for 220 000 shares. After application but prior to allotment, the balance in the application account would be:
A) $600 000 credit.
B) $1 000 000 credit.
C) $660 000 debit.
D) $660 000 credit.

Question

Quizplus · Accepted Answer

The balance in the application account prior to allotment would be a credit of $660,000, calculated as 220,000 shares applied for multiplied by the application price of $3.00 per share.

XYZ Ltd Was Registered as a Company on 1 July