Springtown Ltd issued 10 000 ordinary shares for $2.50 each,payable $1 on application,50 cents on allotment and $1 in calls as required.The journal entries to record the allotment of 10 000 shares would include a:

Question

Quizplus · Accepted Answer

The allotment of shares involves the transfer of ownership from the company to the shareholders. The shareholders have agreed to pay the allotment price of 50 cents per share. Therefore, the journal entry to record the allotment of 10,000 shares would include a credit to share capital for the total value of shares allotted, which is $25,000. Since no cash is received at the time of allotment, there would be no debit to cash or allotment account. Hence, option D, credit to share capital for $25,000, is the correct answer.

Springtown Ltd Issued 10 000 Ordinary Shares for $2