Sandhill Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 16 shares at a price of $42 per share. Terms of the subscription stated that subscribers were to pay 40% of the price as a down payment, with the remainder due in six months. On June 1, 2023, 130 subscriptions were sold. Six months later, on December 1, only 65 of the subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any defaulted subscriptions.

Sandhill Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 16 shares at a price of $42 per share. Terms of the subscription stated that subscribers were to pay 40% of the price as a down payment, with the remainder due in six months. On June 1, 2023, 130 subscriptions were sold. Six months later, on December 1, only 65 of the subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any defaulted subscriptions.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Prepare Journal entries for the following cases.

a) To record sale of shares on a subscription basis

b) To record collection of down payment

c) Collection of share subscriptions receivable

d) To record issuance of shares

e) To record forfeit of payment from defaulting subscribers

Sandhill Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 16 shares at a price
of $42 per share. Terms of the subscription stated that subscribers were to pay 40% of the price as a down payment, with the
remainder due in six months. On June 1, 2023, 130 subscriptions were sold. Six months later, on December 1, only 65 of the
subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any
defaulted subscriptions.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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