When Shares Are Issued Fully Payable on Application, the Journal

question 57

Short Answer

When shares are issued fully payable on application, the journal entries to record the issue (assuming the minimum subscription is reached) are $\begin{array}{cccc}\text { Cash trust } & \mathrm{Dr} & \mathrm{X} & \\\text { Application } & \mathrm{Cr} & & \text { X } \\\text { Allotment } & \mathrm{Dr} & \mathrm{X} \\\text { Share capital } & \mathrm{Cr} & & \mathrm{X} \end{array}$

$\begin{array}{lll}\text { Cash trust } & \text { Dr } & \text { X } \\\text { Application } & \mathrm{Cr} & & \mathrm{X} \\\text { Cash } & \mathrm{Dr} & \mathrm{X} \\{\text { Cash trust }} & \mathrm{Cr}&& \mathrm{X} \end{array}$

$\begin{array}{lllll}{\text { Cash }} & \mathrm{Dr} & \mathrm{X} & \\ \text { Call } & \mathrm{Cr} & & \mathrm{X} \\\text { Call } & \mathrm{Dr} & \mathrm{X} & \\ \text { Share capital } & \mathrm{Cr} & & \text { X }\end{array}$


$\begin{array}{llc}\text { Cash trust } & \mathrm{Dr} & \mathrm{X} \\\text { Application } & \mathrm{Cr} &&\mathrm{X} \\\text { Application } & \mathrm{Dr} & \mathrm{X} \\\quad \text { Share capital } & \mathrm{Cr} &&\mathrm{X} \\\text { Cash } & \mathrm{Dr} & \mathrm{X}\\\text { Cash trust}& \mathrm{Cr} &&\mathrm{X} \end{array}$

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Definitions:

Marginal Cost

The money spent on producing another unit of a product or service.

Cartel

A coalition of suppliers or manufacturers aimed at preserving elevated price levels and reducing competitive pressures.

Marginal Cost

The upsurge in total expenditure associated with the fabrication of one further unit of a good or service.

Cartel

A formal agreement among competing firms to control prices, limit output, or divide markets to gain an advantageous market position.