Answer to Question #126578 in Accounting for Willy

Question

Beloved Company was incorporated on January 1, 2020 with a authorized share capital of 300,000 shares at $20 par value. Record the transactions completed during the months of January and February.

a. The incorporators subscribed to twenty five percent of the authorized share capital and paid 25% of the subscription price.

b. The incorporators paid the balance of the subscription.

Journalize the transactions

Answer 1

Journal entries

                                                                                            Dr.                                              Cr.

   Unissued Shared Capital                                         $6,000,000

              Authorized Shared Capital                                                                            $6,000,000

 

        (To record the issuance of 300000 authorized share capital $20 par value)

a. Subscription Receivable                                          $1,500,000

               Subscribed Share Capital                                                                             $1,500,000

       (To record subscribed share capital 25% x 6000000)

     Cash                                                                        $375,000

                Subscription Receivable                                                                               $375,000

   

      (To record the cash received on subscribed share capital 25% x 1500000)

b. Cash                                                                        $1,125,000

               Subscription Receivable                                                                                $1,125,000

      (To record the balance received on subscribed share capital 75% x 1500000)

Explanation:

Subscribed share capital: 25% X $6,000,000 = $1,500,000

then X 25%=PAID SUBSCRIPTION

b remaining balance of subscribed subscription receivable