Question

EACH EMPTY LINE SHOULD BE FILLED WITH AN ACCOUNT. PLEASE PAY ATTENTION TO THE NUMBER OF LINES FOR EACH JOURNAL ENTRY

Ayayai Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 10 shares at a price of $40 per share. Terms of the subscription stated that subscribers were to pay 20% of the price as a down payment, with the remainder due in six months. On June 1, 2020, 100 subscriptions were sold. Six months later, on December 1, only 50 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 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
June 1Dec. 1
	(To record sale of shares on a subscription basis)
	(To record collection of down payment)
June 1Dec. 1
	(Collection of share subscriptions receivable)
	(To record issuance of shares)
	(To record forfeit of payment from defaulting subscribers)

Prepare the December 1 journal entry, assuming instead that Ayayai refunded the down payment on the defaulted subscriptions. (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 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 1
	(To record refund to defaulting subscribers)

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Jun-01	Subscription Receivable	40000
	Common Stock Subscribed		40000
	To record sale of shares on a subscription basis
Jun-01	Bank	8000
	Subscription Receivable		8000
	To record collection of down payment
Dec-01	Bank	16000
	Subscription Receivable		16000
	Collection of share subscriptions receivable
Dec-01	Common Stock Subscribed	20000
	Common Stock		20000
	To record issuance of shares
Dec-01	Common Stock Subscribed	20000
	Subscription Receivable		16000
	Subscription Default		4000
	To record forfeit of payment from defaulting subscribers
Dec-01	Common Stock Subscribed	20000
	Subscription Receivable		16000
	Bank		4000
	To record refund to defaulting subscribers