North Point Ltd was incorporated on 1 June 2015 and five (5) subscribers underto

Question

North Point Ltd was incorporated on 1 June 2015 and five (5) subscribers undertook to purchase 10,000 $1 ordinary shares each in the company and paid for the shares on 1 June 2015.

b)      $2,500 was paid to the solicitors for the formation of the company on

2 June 2015.

c)         The directors resolved to issue 500,000 ordinary share payable 50% upon application. Applicants applied for 600,000 shares and 50% each share. The unsuccessful shareholders were refunded on

10 June 2015.

d)         The directors made a call of 50 cent for ordinary shares on

1 October 2015 and all call money was received except 10,000 shares.

e)       On 1 November 2015 the directors issued 1000 each of 10% Preference shares at $100 each. The applicants paid full amount for the shares and the shares were allotted on 10 November 2015.

f)         On 1 December 2015, the directors decided to raise $500,000 by issuing 5,000 each of 8% debentures maturing in 10 years. The debentures were fully subscribed and allotted by 10 December 2015.                                                                                                            8% debentures maturing in 10 years. The debentures were fully subscribed and allotted by 10 December 12.

In this task you are required to:

Record the above transactions in the appropriate journals.

(Posting to the ledger is not required.)

Explanation / Answer

Date Accounts Debit Credit 06-01-15 Cash 50000 Common Stock 50000 (ordinaery Shares issued to 5 subscribers at par $1 10000 to each) 06-02-15 Formation Expenses 2500 Cash 2500 (Formation Exps. paid to soliciters) 06-10-15 Cash 300000 Ordinary Share Applicant 300000 (50 % application money received on 600000 share application) 06-10-15 Ordinary Shares Applicant A/c 250000 Common Stock 250000 (500000 Ordinary Shares Alloted) 06-10-15 Ordinary Share Application 50000 Cash 50000 (Money refunded on 100000 shares applications) 10-01-2015 Cash A/c 245000 Calls is Arrears on common stock 5000 Common Stock 250000 (Final Call Amount received except on 10000 share) 11-01-2015 Cash 100000 Pr. Share Applicant 100000 (money received for 1000 $ 100 pr shares) 11-10-2015 Pr. Share Applicant 100000 Pr. Share Capital 100000 (1000 Pr. Shares Alloted) 12-01-15 Cash 500000 Debenture Applicant 500000 (Money received on 8% 5000 10 year each debenture) 12-10-15 Debenture Applicant 500000 8% $5000 10 Year Debenture 500000 (Debenture Alloted)

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