Sundowner Plc Called for Subscriptions for 2 Million Shares B)
C)
D)

question 49

Multiple Choice

Sundowner Plc 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?

• A) \(\begin{array}{l} \text { Summary entry for July: }\\ \begin{array}{|l|l|l|l|} \hline \mathrm{Dr} & \text { Application } & 15000000 & \\ \hline \mathrm{Cr} & \text { Share capital } & & 15000000 \\ \hline & & & \\ \hline {\text { August: }} & & \\ \hline & & & \\ \hline \mathrm{Dr} & \text { Allotment } & 4000000 & \\ \hline \mathrm{Cr} & \text { Application } & & 4000000 \\ \hline\\ \hline \mathrm{Dr} & \text { Share capital } & 6000000 & \\ \hline \mathrm{Cr} & \text { Application } & & 6000000 \\ \hline & & & \\ \hline \mathrm{Dr} & \text { Allotment } & 3000000 & \\ \hline \mathrm{Cr} & \text { Application } & & 3000000 \\ \hline\\ \hline \mathrm{Dr} & \text { Cash at bank } & 15000000 & \\ \hline \mathrm{Cr} & \text { Allotment } & & 15000000 \\ \hline {\text { Summary entry for August: }} & & \\ \hline \mathrm{Dr} & \text { Allotment } & 1000000 & \\ \hline \mathrm{Cr} & \text { Application } & & 1000000 \\ \hline\\ \hline \text { Entry for1 October: }\\ \hline \mathrm{Dr} & \text { Call } & 2000000 & \\ \hline \mathrm{Cr} & \text { Application } & & 2000000 \\ \hline\\ \hline{\text { Summary entry for October: }} & & \\ \hline \mathrm{Dr} & \text { Cash at bank } & 2000000 & \\ \hline \mathrm{Cr} & \text { Call } & & 2000000 \\ \hline \end{array} \end{array}\)

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Definitions:

Anticipatory Breach

When one party indicates before the time of performance that they will not fulfill their part of the contract.

Performance

The execution or accomplishment of work, acts, feats, or functions as specified in a contract or agreement.

Repudiation

The rejection or denial of a duty, obligation, or contract.

Anticipatory Breach

An expressed or implied declaration by one party to a contract that they do not intend to fulfill their future obligations under the contract.