Reference no: EM132759298

Problem 1: Accountants must use when deciding if an item is material.

Select one:

a. a set of rules.

b. professional judgement.

c. a text book.

d. the code of conduct.

Problem 2: Lotus Company Ltd decided to issue 100 000 ordinary shares for $3.00 each, payable in instalments, 50c on application, $1.50 on allotment and the balance payable at the discretion of the company. Applications were received for 120 000 shares. The shares were allotted by the directors a week after the close of applications and refunds were made for 20 000 shares. The correct journal entry to record the full receipt of the allotment instalment is:

Select one:

a. DR Bank account $180 000; CR Allotment $180 000

b. DR Bank account $150 000; CR Allotment $150 000

c. DR Allotment $180 000; CR Share capital $180 000

d. DR Share capital $150 000; CR Bank account $150 000