On 1 July 2017, Pine Ltd issued a prospectus inviting applications for 600 000 o
ID: 2463547 • Letter: O
Question
On 1 July 2017, Pine Ltd issued a prospectus inviting applications for 600 000 ordinary shares, at an issue price of $7, payable $2.50 on application, $1.50 on allotment, and $3 on future call(s), dates to be determined by the directors. By 1 September, applications were received for 620 000 shares with $2.50 paid per share. On 6 September, the directors allotted 600 000 shares. Refunds were made to applicants for 20 000 shares. Share issue costs of $12 400 were also paid on the same date. All of the allotment money was received by 1 October. On 1 February 2018, a first and final call for $3 was made. All of the call money was received by 1 March 2018.
Required
Prepare journal entries to record the above transactions.
Explanation / Answer
2017
To 1 Sept
Cash Trust
Dr
1 550 000
Application
Cr
1 550 000
(being receipt of applications for 620,000 shares at $2.50 per share)
6 Sept
Application
Dr
1 500 000
Allotment
Dr
900 000
Share Capital
Cr
2 400 000
(being issue of 600,000 shares)
Application
Dr
50 000
Cash Trust
Cr
50 000
(being refund to unsuccessful applicants)
Share Capital/Share Issue Costs
Dr
12 400
Cash/Payables
Cr
12 400
(being payment of share issue costs)
Cash
Dr
1 500 000
Cash Trust
Cr
1 500 000
(transfer of application money)
To 1 October
Cash
Dr
900 000
Allotment
Cr
900 000
(being receipt of allotment money due)
1 Feb 2018
Call
Dr
1 800 000
Share Capital
Cr
1 800 0000
(being first and final call for $3)
To 1 March
Cash
Dr
1 800 000
Call
Cr
1 800 000
(being receipt of call money)
2017
To 1 Sept
Cash Trust
Dr
1 550 000
Application
Cr
1 550 000
(being receipt of applications for 620,000 shares at $2.50 per share)
6 Sept
Application
Dr
1 500 000
Allotment
Dr
900 000
Share Capital
Cr
2 400 000
(being issue of 600,000 shares)
Application
Dr
50 000
Cash Trust
Cr
50 000
(being refund to unsuccessful applicants)
Share Capital/Share Issue Costs
Dr
12 400
Cash/Payables
Cr
12 400
(being payment of share issue costs)
Cash
Dr
1 500 000
Cash Trust
Cr
1 500 000
(transfer of application money)
To 1 October
Cash
Dr
900 000
Allotment
Cr
900 000
(being receipt of allotment money due)
1 Feb 2018
Call
Dr
1 800 000
Share Capital
Cr
1 800 0000
(being first and final call for $3)
To 1 March
Cash
Dr
1 800 000
Call
Cr
1 800 000
(being receipt of call money)
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