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    Tutorial Ex 16.3 Answer

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    Hamza Anees
    1. The shares were fully subscribed so the journal entries recorded the $80,000 cash received on application, the $80,000 receivable on allotment, the $80,000 received on allotment, $40,000 receivable on the first call, and the $40,000 received on the first call. 2. The shares were undersubscribed by 6,000 shares so the journal entries recorded $68,000 cash received on application instead of $80,000. It also recorded $68,000 receivable on allotment, $68,000 received on allotment, and $34,000 receivable and received on the first call, reflecting the undersubscription.

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    Tutorial Ex 16.3 Answer

    Uploaded by

    Hamza Anees
    98 views2 pages
    1. The shares were fully subscribed so the journal entries recorded the $80,000 cash received on application, the $80,000 receivable on allotment, the $80,000 received on allotment, $40,000 receivable on the first call, and the $40,000 received on the first call. 2. The shares were undersubscribed by 6,000 shares so the journal entries recorded $68,000 cash received on application instead of $80,000. It also recorded $68,000 receivable on allotment, $68,000 received on allotment, and $34,000 receivable and received on the first call, reflecting the undersubscription.

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    Financial Accounting

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    1. The shares were fully subscribed so the journal entries recorded the $80,000 cash received on application, the $80,000 receivable on allotment, the $80,000 received on allotment, $40,000 receivable on the first call, and the $40,000 received on the first call. 2. The shares were undersubscribed by 6,000 shares so the journal entries recorded $68,000 cash received on application instead of $80,000. It also recorded $68,000 receivable on allotment, $68,000 received on allotment, and $34,000 receivable and received on the first call, reflecting the undersubscription.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    98 views2 pages

    Tutorial Ex 16.3 Answer

    Uploaded by

    Hamza Anees
    1. The shares were fully subscribed so the journal entries recorded the $80,000 cash received on application, the $80,000 receivable on allotment, the $80,000 received on allotment, $40,000 receivable on the first call, and the $40,000 received on the first call. 2. The shares were undersubscribed by 6,000 shares so the journal entries recorded $68,000 cash received on application instead of $80,000. It also recorded $68,000 receivable on allotment, $68,000 received on allotment, and $34,000 receivable and received on the first call, reflecting the undersubscription.

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    of 2

    Tutorial Exercise Answers ACC201 Financial Accounting

    Exercise 16.3 Issue of shares by instalments and


    undersubscription

    On 30 April, Tamworth Ltd issued 40 000 shares for $6 each, payable $2 on application, $2 on
    allotment and the remainder due by two equal calls on 30 June and 31 August. Share issue costs
    of $3500 were paid on 31 May.

    Required
    Prepare journal entries (in general journal format) to record the share issue up to collection of
    allotment money assuming:
    1. the shares were fully subscribed
    2. the shares were undersubscribed by 6000 shares.

    1.
    Cash Trust 80 000
    Application 80 000
    Cash received ($2) on application

    Application ($2) 80 000


    Allotment ($2) 80 000
    Share Capital 160 000
    Amounts receivable on application and allotment on issue
    of shares.

    Cash at Bank 80 000


    Cash Trust 80 000
    Transfer of cash.

    Cash at Bank 80 000


    Allotment 80 000
    Amount received on allotment.

    Share Capital 3 500


    Cash at Bank 3 500
    Share issue costs paid.

    Call 1 40,000
    Share Capital 40,000

    Cash at Bank 40,000


    Call 1 40,000
    Tutorial Exercise Answers ACC201 Financial Accounting

    2.
    Cash Trust 68 000
    Application 68 000
    (34 000  $2) Cash received on application.

    Application ($2) 68 000


    Allotment ($2) 68 000
    Share Capital 136 000
    Amounts receivable on application and allotment on issue of
    shares.

    Cash at Bank 68 000


    Cash Trust 68 000
    Transfer of cash.

    Cash at Bank 68 000


    Allotment 68 000
    Amount received on allotment.

    Share Capital 3 500


    Cash at Bank 3 500
    Share issue costs paid.

    Call 1 34,000
    Share Capital 34,000

    Cash at Bank 34,000


    Call 1 34,000

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