Page 26 - Ebook Financial Accounting 3

Example 2.1:

AA Bhd was incorporated with an authorized capital of 30,000,000 ordinary shares of RM3.
The director offered 20,000,000 ordinary shares at RM3 each for subscription, payable in full

upon application. Applications were received for 25,000,000 shares. The money received on
the oversubscribed shares was refunded and all monies due were received.

Required:

Show the necessary journal entries and prepare the statement of financial position upon
completion of the above transaction.

Answer:

Journal entries for full payment

Item Dr Cr
Bank 75,000,000

Application 75,000,000

(Amount received on application) (25m x RM3)

Application 60,000,000

Share Capital 60,000,000
(Application money transferred to share capital)

(20m x RM3)

Journal entries for the money refunded

Item Dr Cr
Application 15,000,000

Bank 15,000,000
(Refund to unsuccessful applicants) (5m x RM3)

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