Semaphore Ltd Called for Subscriptions for 15 Million Shares

question 50

Multiple Choice

Semaphore Ltd called for subscriptions for 15 million shares.The issue price per share is $2.50 to be paid in two parts: the first payment of $1.00 is to be made on application and the remaining $1.50 is to be paid within 1 month of allotment.At the end of September,when applications close,applications for 19 million shares have been received.The shares are allotted on 1 October on a pro rata basis with the excess application money to be applied against the amount due on allotment.All amounts on allotment are paid by the due date.What are the accounting entries to record these events?

---

Definitions:

Signature

A person's name written in a distinctive way as a form of identification in authorizing a document.

Time Draft

A type of financial instrument that allows the payer to delay payment until a specified future date, as indicated on the draft.

Sight Draft

A financial document that demands payment on presentation to the drawee.

Promissory Note

A financial document in which one party promises to pay another party a specified sum of money at a specified time.