Question 520 Marks

Sydney Ltd was incorporated on 1 July 2020. On 1 July, the board of directors decided to issue 500 000 ordinary shares on the following terms.

Application

$1.00 per share

Allotment

$1.00 per share

Call as required

$1.00 per share

By the end of July, Sydney Ltd received applications for 600 000 shares with the application money due on each share. One applicant for 100 000 shares had forwarded $300 000 in full payment of the shares.

On 15 August, the directors proceeded to allot 500 000 shares on the following basis. 100 000 shares were allotted to the applicant who paid for the shares in full, and the other successful applicants were allotted the remaining shares based on a proportional basis. Excess application money will be transferred to the allotment.

On 30 September, all allotment money had been received.A first and final call was made on 1 October, and all call money was received by 30 October except for the amount due on 20 000 shares.

Required:Prepare journal entries to record the above transactions.