Sundowner Ltd Called for Subscriptions for 2 Million Shares

question 15

Multiple Choice

Sundowner Ltd called for subscriptions for 2 million shares. The issue price per share is $6.00 to be paid in three parts: the first payment of $3.00 is to be made on application, $2.00 is to be paid within 1 month of allotment and the remaining $1.00 is to be paid within 6 months of allotment. At the end of July, when applications close, applications for 5 million shares have been received. Two million share applicants were unsuccessful, while the remaining 3 million applicants were allotted shares on 1 August on a pro rata basis with the excess application money to be applied against the amount due on allotment. The first and final call on the shares is made on 1October. Assume all amounts on allotment and call are paid by the due date. What are the accounting entries to record these events?

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Definitions:

Decimal

Numbers that are expressed as a fraction of a part using 10 as its base number; it also refers to the period used to separate a whole number from a fraction, as in 10.2, otherwise read as “ten and two-tenths.”

Fraction

A numerical quantity that is not a whole number, representing a part of a whole.

Base Number

A mathematical value serving as a foundational digit in a numbering system, determining its counting process, such as 2 in binary or 10 in decimal.

Dosages

The prescribed amount and frequency of medication intake or drug administration.