Reference no: EM132844941

Question - Share Subscriptions - Dory Corporation offered to sell its common shares on a subscription basis. Each subscription required the purchase of a specified number of shares. On May 15, 2020, several subscriptions were sold. Details pertaining to these subscriptions follow:

Number of shares sold in a single subscription 15

Subscription price per share $68

Down payment required at time of subscription 27%

Number of share subscriptions sold 169

Each of the subscribers agreed to pay the remainder of the subscription proceeds in 2 equal instalments due on August 15, 2020 and on November 15, 2020.

Assume that all subscribers paid the initial down-payment and the first instalment, but that only 128 of subscribers made the final instalment. All subscribers who paid for their subscriptions in full on November 15 receive their shares on the same date.

Required -

a) Prepare all of the journal entries required for the subscription contract on each of the following dates:

May 15, 2020

August 15, 2020

November 15, 2020 (only for the 128 subscribers who paid their subscriptions in full)

b) Prepare the required journal entries on November 15, 2020 for the defaulting subscribers, given each of the following independent scenarios:

i. The subscription contract states that the investor will forfeit the downpayment and all instalment payments made, should the subscriber default on the final payment.

ii. The subscription contract states that the investor will receive a refund in the amount of the downpayment and all instalment payments made, should the subscriber default on the final payment.