Sundowner Ltd Called for Subscriptions for 2 Million Shares

question 49

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:

Direct Competition

Two or more businesses offering products or services that directly compete against each other.

Currency Fluctuation

Refers to the variations in the value of one currency relative to another, which can impact international trade and investments.

Substitute Products

Goods and services that perform very similar functions and can be used in place of one another.

Recession

A period of economic decline across a significant portion of an economy, lasting for a few months or more.