Whitely Ltd issues 50 000 shares at $4.60 per share.The accounting effect of the issue is:

Question

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When a company issues shares, the amount received from shareholders is recorded as a credit to the share capital account. In this case, Whitely Ltd issued 50,000 shares at $4.60 per share, which means that they received $230,000 (50,000 x $4.60) from shareholders. Therefore, the accounting effect of the issue is to debit cash at bank for $230,000 and credit share capital for $230,000. Option A reflects this correctly. Option B is incorrect as applications is not a standard account that is used in this context. Option C is incorrect as the company received $230,000 and not $50,000. Option D is incorrect as there must be an accounting entry for the receipt of funds from shareholders.

Whitely Ltd Issues 50 000 Shares at $4