ABC Ltd was registered as a company on 1 July 2013.On 4 July 2013,ABC Ltd issued a prospectus offering 250 000 ordinary shares at an issue price of $3.50 each,payable $2.50 on application and $1.00 on allotment.Applications closed on 1 August 2013 with the company having received applications for 300 000 shares.The shares were allotted on 15 August 2013,with the over-subscription amount being refunded to unsuccessful applicants.All allotment money was received by 31 August 2013.Following the allotment,the balance in the share capital account would be:

Question

Quizplus · Accepted Answer

Number of shares issued = 250,000
Issue price per share = $3.50
Amount received on application = 250,000 x $2.50 = $625,000
Amount received on allotment = 250,000 x $1.00 = $250,000
Total amount received = $875,000

As all the allotment money was received by 31 August 2013, the share capital account will be credited with the full amount of $875,000. Therefore, the correct choice is B - $875,000 credit.

ABC Ltd Was Registered as a Company on 1 July