Sundowner Ltd called for subscriptions for 2 million shares.The issue price per share is $6.00 to be paid in three parts: the first payment of $3.00 is to be made on application,$2.00 is to be paid within 1 month of allotment and the remaining $1.00 is to be paid within 6 months of allotment.At the end of July,when applications close,applications for 5 million shares have been received.Two million share applicants were unsuccessful,while the remaining 3 million applicants were allotted shares 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

B is the correct answer as it records all the events according to the given scenario. 
A records only the application money received and credited to the share application account but does not account for allotment and calls.
C records the application money and allotment but does not account for the excess application money to be applied against the amount due on allotment.
D records the application money, allotment, and excess application money but does not account for the second call.

Sundowner Ltd Called for Subscriptions for 2 Million Shares