Question

Splish Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 20 shares at a price of $80 per share. Terms of the subscription stated that subscribers were to pay 40% of the price as a down payment, with the remainder due in six months. On June 1, 2020, 210 subscriptions were sold. Six months later, on December 1, only 105 of the subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any defaulted subscriptions.

Current Attempt in Progress Splish Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 20 shares at a price of $80 per share. Terms of the subscription stated that subscribers were to pay 40% of the price as a down payment with the remainder due in six months. On June 1, 2020, 210 subscriptions were sold. Six months later, on December 1, only 105 of the subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any defaulted subscriptions. Prepare the journal entries to record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Credit Date June 1 1600 Account Titles and Explanation Share Subscriptions Receivable Common Shares Subscribed (To record sale of shares on a subscription basis) Cash 640 June 1 Share Subscriptions Receivable (To record collection of down payment) Share Subscriptions Receivable Common Shares Subscribed (Collection of share subscriptions receivable) 960 (To record issuance of shares) (To record forfeit of payment from defaulting subscribers)

Answer 1

Case 1,

Date	Account title and explanation	Debit	Credit
June 1 2020	Subscription receivable	$      336,000
	Common stock - subscribed		$      336,000
	(To record sale of shares on a subscription basis)
June 1 2020	Cash	$      134,400
	Subscription receivable		$      134,400
	(To record collection of down payment)
Dec 1 2020	Cash	$      100,800
	Subscription receivable		$      100,800
	(Collection of share subscriptions receivable)
Dec 1 2020	Common stock - subscribed	$      168,000
	Common stock		$      168,000
	(To record issuance of shares)
Dec 1 2020	Common stock - subscribed	$      168,000
	Subscription receivable		$      100,800
	APIC - Forefeited subscription		$        67,200
	(To record forefeit of payment from defaulting subscribers

Case 2,

Date	Account title and explanation	Debit	Credit
Dec 1 2020	Common stock - subscribed	$      168,000
	Subscription receivable		$      100,800
	Cash		$        67,200
	(To record refund to defaulting subscribers

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