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JAMB Principles of Accounts 2012 Question 43

Question 43

Company Accounts

When shares are oversubscribed and money returned to unsuccessful applicants, the entry to record such money is to debit

  1. A.application and allotment account and credit unsubscribed shares
  2. B.application and allotment account and credit cash
  3. C.oversubscribed shares and credit cash
  4. D.oversubscribed shares and credit allotment account.
Show the answer and explanation

Answer: B (application and allotment account and credit cash)

Explanation

The refund reverses part of the application money: debit application and allotment, credit cash (bank).