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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Sangam Ltd. invited applications for 20,000 Equity Shares of ₹100 each, issued at par, the entire amount payable on application. The issue was oversubscribed by 5,000 shares, and allotment was made on a pro-rata basis. Pass the necessary Journal entries.
JOURNAL (Books of Sangam Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bank A/c (25,000 × ₹100) Dr. | 25,00,000 | |||
| To Share Application and Allotment A/c | 25,00,000 | |||
| (Application money received on 25,000 equity shares) | ||||
| Share Application and Allotment A/c Dr. | 25,00,000 | |||
| To Share Capital A/c (20,000 × ₹100) | 20,00,000 | |||
| To Bank A/c (5,000 × ₹100) | 5,00,000 | |||
| (Application money for 20,000 shares transferred to Share Capital, and the balance refunded) |
Note: Since the entire amount is payable on application, the pro-rata allotment simply reduces every applicant’s shares proportionately (25,000 applications for 20,000 shares, a ratio of 4 : 5); as there is no further instalment to adjust the surplus against, the excess of ₹5,00,000 collected is refunded in cash.
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Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.21 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
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