QUESTION 2 (14 marks)

On 1 July 2019, New Angelia Ltd was incorporated, and on 4 July a prospectus was issued inviting applications for 80 000 shares for $10 each, payable by instalment as follows:-

- $4.50 on application,

- $3.50 on allotment,

- Call of $2.00 is to be made as and when required.

By 31 July, applications were received for 85 000 shares.

No underwriting was arranged.

On 2 August, the directors allotted 80 000 shares to the successful applicants. Applications for 5 000 shares were rejected and the application money was refunded.

The balance of allotment money was received by 11 August.

Share issue costs of $3 500 were paid on 12 August.

Required

Prepare journal entries to record the above transactions.

(Total - 14 marks)

(Australia country)