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Scenario 1

June 1

The directors issued a prospectus offering 40,000 ordinary shares at an issue price of $2.80, payable $2 on application and 80c as a future call. The closing date for application was 31 September. The share issue was underwritten for a fee of $2,500, payable on 15 October.

September 31

Applications for 50,000 shares had been received.

October 10

The directors allotted the shares pro rata, with applicants receiving 80% of their requested shares. The companys constitution allows excess application monies to be retained and used to offset future calls payable.

Required:

Prepare the general journal entries to record the above independent scenarios.

Narrations to general journal entries must be provided. (Note that narrations are not required in the examination).

Complete and detailed workings/calculations must be shown.

Absence of workings/calculations may lead to zero marks allocated to the particular general journal entry, despite the fact that the entry might be correct!

*This is what I have done so far, need help to check whether I have done everything correctly and how to finish the journal entries for this scenario

31 sept	Bank Trust	100,000
	ApplicAtion		100,000

(app money received)

10 oct	Application	80,000
	allotment	32,000
	share capital		112,000

(issue of shares on app and allot)

10 oct	application	20,000
	allotment		20,000

(transfer of excess app to allot)

10 oct	cash at bank	100,000
	bank trust		100,000

(transfer of funds to gen reserve)

Answer & Explanation Solved by verified expert

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