Question

What will be the journal entry for the money received on application for shares?

Options

• Bank A/c Dr. To Share Application A/c

• Share application A/c Dr. To Bank A/c

• Both Bank A/c Dr. To Share Application A/c and Share application A/c Dr. To Bank A/c

• None of the above

Answer 1

Bank A/c Dr. To Share Application A/c

Explanation:

The bank balance of the firm will expand when the company receives money, so it will be debited, and the company will issue shares, which will increase the company's liabilities, so it will be credited.