Question Scenario 1

June 1. The directors issued a prospectus offering 40,000 ordinary shares at an issue price of $2.80, payable $2 on application and 80c as a future call. The closing date for application was 31 September. The share issue was underwritten for a fee of $2,500, payable on 15 October.

September 31 Applications for 50,000 shares had been received.

October 10 The directors allotted the shares pro rata, with applicants receiving 80% of their requested shares. The companys constitution allows excess application monies to be retained and used to offset future calls payable.

Required:

Prepare the general journal entries to record the above independent scenarios.

Narrations to general journal entries must be provided. (Note that narrations are not required in the examination).

Complete and detailed workings/calculations must be shown.

Absence of workings/calculations may lead to zero marks allocated to the particular general journal entry, despite the fact that the entry might be correct!