Southern Cross Ltd issued a prospectus for the issue of 150,000, $6 shares on 1 January 2022. The prospectus specified that $4 was payable on application, with the balance payable on the allotment. By 2 February 2022, the company received applications for a total of 170,000 shares. On 4 February 2022, Southern Cross Ltd allotted 150,000 shares. the Directors of Southern Cross Ltd decided to refund the money in relation to unsuccessful applications. All of the allotment money was received by 20 February 2022. Required: Prepare the journal entries to account for the issue of shares by Southern Cross Ltd.
Southern Cross Ltd issued a prospectus for the issue of 150,000, $6 shares on 1 January 2022. The prospectus specified that $4 was payable on application, with the balance payable on the allotment.
- By 2 February 2022, the company received applications for a total of 170,000 shares.
- On 4 February 2022, Southern Cross Ltd allotted 150,000 shares. the Directors of Southern Cross Ltd decided to refund the money in relation to unsuccessful applications.
- All of the allotment money was received by 20 February 2022.
Required:
Prepare the
Journal Entry :— It is an act of recording transaction in book of account when it is occured for bookkeeping.
Share Application Due :— It is the multiplication application money alloted and Share Application price per share.
Share application money received :— It is the multiplication of share application received and share application price per share.
Share Allotment Due or Share Allotment money received
= Share alloted × Share Allotment price per share
When excess application is received then it may be refunded or may be allotted on pro rata basis. In this question excess application is refunded.
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