Course Code : HA2032

Course Title : Corporate and Financial Accounting Assignment

University : Holmes Institute

Question 1                                                                                                                  (7 Marks)

XYZ Ltd was registered on 30 June 2020. The next day, the directors issued a prospectus inviting applicants for 200,000 ordinary shares with an issue price of $1. The shares were payable in full on application. By 31 July, the company had received 400,000 applications, together with the application monies. The directors allotted 200,000 shares on 1 August and returned the money for additional applications.

Required:

1. Prepare general journal entries to record the above data. (3.5 marks)

	Journal Entries
	In the Books of XYZ Ltd
Date	Particulars	Amount Dr ($)	Amount Cr ($)
31st July, 2020	Cash Trust A/C              Dr	$400,000.00
	To Share Application A/C		$400,000.00
	(Receipt of application money of $1 for 400000 shares)
1st Auguest, 2020	Share Application A/C           Dr	$200,000.00
	Share Allotment A/C              Dr	$200,000.00
	To Paid-up Capital-Ordinray Shares A/C		$400,000.00
	(Allotment of shares and application os ordinary shares at issue price of $1)
1st Auguest, 2020	Bank A/C                      Dr	$400,000.00
	To Trust A/C		$400,000.00
	(Recognition of that application money no longer held in trust)
1st Auguest, 2020	Share Application A/C      Dr	$200,000.00
	To Trust A/C		$200,000.00
	(Additional money for ordinary shares have been returned to additional applicants)

B) Enter the above data into the ledger tables below. (3.5 marks)

		Debit $	Credit $	Balance $
	Trust account
2020
31st July, 2020   1st August, 2020   1st August, 2020	Application A/C   Application A/C   Bank A/C	$400,000.00	$200,000.00   $200,000.00	$400,000.00       $0.00
	Application
2020
31st July, 2020   1st August, 2020   1stAugust, 2020   1st August, 2020	Cash Trust A/C   Paid-up Capital-Ordinray Shares A/C   Share Allotment A/C   Trust A/C	$400,000.00       $200,000.00	$400,000.00       $200,000.00	$400,000.00   $0.00   $200,000.00   $0.00
	Paid-up capital
2020
1st August, 2020	Share Application A/C		$200,000.00	$200,000.00
	Bank
2020
1st August, 2020	Trust A/C	$200,000.00		$200,000.00

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