ABC Limited Issued a Prospectus Offering 100 000 Ordinary Shares

ABC Limited issued a prospectus offering 100 000 ordinary shares at an issue price of $2.50 each, payable $1.50 per share on application. The company received applications for 110 000 shares. Which of the following entries correctly records the application money?

A) DR Application $165 000 CR Cash trust $165 000
B) DR Cash trust $250 000 CR Application $250 000
C) DR Cash trust $165 000 CR Application $165 000
D) DR Cash trust $275 000 CR Application $275 000

Correct Answer:

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