ABC Ltd was registered as a corporation on 1 July 2014. On 4 July 2014, ABC Ltd issued a prospectus offering 100 000 ordinary shares at an issue price of $2.50 each, payable $1.50 on application and $1.00 on allotment.
Application closed on 1 August 2014 with the company having received applications for 110 000 shares. The shares were allotted on 15 August 2014, with the over-subscription amount being refunded to unsuccessful applicants. All allotment monies were received by 31 August 2014. Following the allotment the balance in the Share Capital account would be:

Question

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The total issue price for 100,000 shares is $250,000 (100,000 shares x $2.50 per share). The amount received on application is $165,000 (110,000 shares applied for x $1.50 per share). The balance due on allotment is $110,000 (100,000 shares allotted - 110,000 shares applied for + 10,000 shares over-subscribed x $1.00 per share). Therefore, the total amount received as allotment monies is $275,000 (100,000 shares x $2.75 per share).

The Share Capital account would be credited for $250,000 (100,000 shares x $2.50 per share) and debited for $250,000 (100,000 shares x $2.50 per share) to reflect the issue of the shares. Allotment monies received would be credited to the Share Allotment account for $275,000 (100,000 shares x $1.00 per share allotment monies received) and would be transferred to the Share Capital account to cover the debited amount, leaving a balance of $250,000 Credit.

ABC Ltd Was Registered as a Corporation on 1 July