This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
Welcome back A — missed you this week. Here are the journal entries for Question One: Step 1: Record application money received When the application money is received, the bank account is debited, and the share application account is credited. Bank Account & Dr. & Tshs. 2,000 \\ To Share Application Account & Cr. & Tshs. 2,000 \\ (Being application money received on 1,000 shares at Tshs. 2 per share) Step 2: Transfer application money to share capital The application money is then transferred from the share application account to the ordinary share capital account. Share Application Account & Dr. & Tshs. 2,000 \\ To Ordinary Share Capital Account & Cr. & Tshs. 2,000 \\ (Being application money on 1,000 shares transferred to share capital) Step 3: Record allotment money due When allotment money becomes due, the share allotment account is debited, and the ordinary share capital account is credited. Share Allotment Account & Dr. & Tshs. 3,000 \\ To Ordinary Share Capital Account & Cr. & Tshs. 3,000 \\ (Being allotment money due on 1,000 shares at Tshs. 3 per share) Step 4: Record allotment money received Upon receiving the allotment money, the bank account is debited, and the share allotment account is credited. Bank Account & Dr. & Tshs. 3,000 \\ To Share Allotment Account & Cr. & Tshs. 3,000 \\ (Being allotment money received) Step 5: Record first and final call money due When the first and final call money becomes due, the share first and final call account is debited, and the ordinary share capital account is credited. Share First and Final Call Account & Dr. & Tshs. 5,000 \\ To Ordinary Share Capital Account & Cr. & Tshs. 5,000 \\ (Being first and final call money due on 1,000 shares at Tshs. 5 per share) Step 6: Record first and final call money received Upon receiving the first and final call money, the bank account is debited, and the share first and final call account is credited. Bank Account & Dr. & Tshs. 5,000 \\ To Share First and Final Call Account & Cr. & Tshs. 5,000 \\ (Being first and final call money received) The journal entries are complete. What's next? 📸