OlengoLewe Telcoms Ltd has an authorized share capital of Shs 20 million shares divided into 1.5 million shares of 10 each. An extract of the balance sheet as at 30th June 2010 was as follows: Shs' 000 Shs' 000 Fixed Assets 10560 Current Assets Stock 3450 Debtors 1470 Bank Balance 795 Total assets 5715 Creditors (825) 4890 Total net assets 15450 Financed by: 500000 ordinary shares Shs 10 par value 7500 250000 8% preference shares of Shs 30 par value 7500 Share premium 450 15450 On July 2010, the company offered 500,000 ordinary shares for sale to the public at Shs 20 each, payable as follows: 

o On application, Shs 5. 

o On allotment Shs 12 including the premium. 

o On first and final call Shs 3 Applications were received on 15th July and allotment made on 31st July and allotment made on 31 July 2010. The allotment money was received on 15th August. The first and final call was made on 15 September 2010 and the money was received on 30 September 2011. The company received applications for 650,000 shares. Applications for 50,000 shares were rejected and the application money was refunded. The shares were then allocated on a prorated basis, the excess of the application money being carried forward in part satisfaction of the amounts due on allotment. 

Required: 

Prepare journal entries.

Answer rating: 100% (QA)

Answer Explanation a Date General Journal Debit Shs Credit Shs 2010 July 15 Bank 3250000 Share application 3250000 To record application money receive... View the full answer