TUTORIAL 1 - TUTORIAL 1 Question 2.3 Share issue payment by instalments On 1 July 2017 Pine Ltd issued a prospectus inviting applications for 600 000

TUTORIAL 1 - TUTORIAL 1 Question 2.3 Share issue payment by...

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1 TUTORIAL 1 Question 2.3 Share issue, payment by instalments On 1 July 2017, Pine Ltd issued a prospectus inviting applications for 600 000 ordinary shares, at an issue price of $7, payable $2.50 on application, $1.50 on allotment, and $3 on future call(s), dates to be determined by the directors. By 1 September, applications were received for 620 000 shares with $2.50 paid per share. On 6 September, the directors allotted 600 000 shares. Refunds were made to applicants for 20 000 shares. Share issue costs of $12 400 were also paid on the same date. All of the allotment money was received by 1 October. On 1 February 2018, a first and final call for $3 was made. All of the call money was received by 1 March 2018. Required Prepare journal entries to record the above transactions. PINE LTD General Journal 2017 To 1 Sept Cash Trust Dr 1 550 000 Application Cr 1 550 000 (being receipt of applications for 620,000 shares at $2.50 per share) 6 Sept Application Dr 1 500 000 Allotment Dr 900 000 Share Capital Cr 2 400 000 (being issue of 600,000 shares) Application Dr 50 000 Cash Trust Cr 50 000 (being refund to unsuccessful applicants) Share Capital/Share Issue Costs Dr 12 400 Cash/Payables Cr 12 400 (being payment of share issue costs) Cash Dr 1 500 000 Cash Trust Cr 1 500 000
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2 (transfer of application money) To 1 October Cash Dr 900 000 Allotment Cr 900 000 (being receipt of allotment money due) 1 Feb 2018 Call Dr 1 800 000 Share Capital Cr 1 800 0000 (being first and final call for $3) To 1 March Cash Dr 1 800 000 Call Cr 1 800 000 (being receipt of call money)
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