Cullumber Ltd. offered to sell common shares on a subscription basis. Each subsc

Question

Cullumber Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 35 shares at a price of $10 per share. Terms of the subscription stated that subscribers were to pay 30% of the price as a down payment, with the remainder due in six months. On October 1, 2018, 52 subscriptions were sold. Six months later, on April 1, 2019, only 43 of the subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any defaulted subscriptions.

Prepare the journal entries to record the above transactions.

Prepare the October 1 journal entry, assuming instead that Cullumber refunded the down payment on the defaulted subscriptions.

Explanation / Answer

Original transactions:

revised transactions:

:

Date Account Debit Credit Info Oct.1 Cash         5,460 cash received= 52 * 35shares * 10 per share *30% Stock subscription receivable      12,740 Receivable= 52 * 35shares * 10 per share *70% Common stock subscribed       18,200 Subscription amount= 52 * 35shares * 10 per share [share subscription accounted] Apr.1 Cash      10,535 cash received= 43 * 35shares * 10 per share *70% Stock subscription receivable       10,535 Common stock subsribed      15,050 common stock capital created= 43*35*10 common stock       15,050 common stock capital created= 43*35*10 [final due money received and respective stock capital created] Apr.1 Common stock subsribed         3,150 additional paid in capital             945 Retained cash= (52-43)*35shares*10 per share *30% Stock subscription receivable          2,205 derecognised receivable= (52-43)*35shares*10 per share *70% [retained subscription amount for the unapaid subscribers]

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