Signal Ltd called for subscriptions for 8 million shares.The issue price per share is $3.50 to be paid in three parts: the first payment of $1.00 is to be made on application,$1.50 is to be paid within 1 month of allotment and the remaining $1.00 is to be paid within 3 months of allotment.At the end of July,when applications close,applications for 10 million shares have been received.The shares are allotted on 1 August on a pro rata basis with the excess application money to be applied against the amount due on allotment.The first and final call on the shares is made on 1October.Assume all amounts on allotment and call are paid by the due date.What are the accounting entries to record these events?
E) None of the given answers.

Question

Quizplus · Accepted Answer

1. On receipt of applications:

DR Bank $35,000,000 (10,000,000 shares x $3.50)
CR Share Capital $8,000,000 (8,000,000 shares x $1.00)
CR Share Application $27,000,000 (10,000,000 shares x $2.70)

2. On allotment:

DR Share Application $2,000,000 [(10,000,000 shares - 8,000,000 shares) x $2.70]
DR Share Allotment $22,000,000 (8,000,000 shares x $2.75)
CR Share Capital $28,000,000 (8,000,000 shares x $3.50)
CR Share Premium $18,000,000 [(8,000,000 shares x ($3.50 - $2.70) - $2,000,000]

3. On first call:

DR Share Allotment $8,000,000 (8,000,000 shares x $1.00)
CR Share Capital $8,000,000 (8,000,000 shares x $1.00)

4. On final call:

DR Share Allotment $8,000,000 (8,000,000 shares x $1.00)
CR Share Capital $8,000,000 (8,000,000 shares x $1.00)

Signal Ltd Called for Subscriptions for 8 Million Shares