Question 14 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 14 Chapter 8 of +2-A – T.S. Grewal 12 Class

By Shubham Sharma 7 Min Read December 20, 2020

Question No.14 - Chapter No.8 - T.S. Grewal +2 Book 2019-Solution-min-min

Question 14 Chapter 8 of +2-A

Table of Contents

The solution of Question 14 Chapter 8 of +2-A: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

14. A company invited applications for 75,000 equity share of 100 each. The application money received @Rs 30 per share was Rs 27,00,000. name the kind of subscription. List the three alternatives for allotting these shares.

The solution of Question 14 Chapter 8 of +2-A: –

In the case of this company, This type of share subscription is known as the oversubscription of shares.

It’s a kind of subscription that happens because of the number of shares were subscribed by the public more than the number of shares issued by the company in the share market. So, The company can be made allotment of share to the extent of the number of shares issued.
In this circumstance, a company can use 3 possible ways to tackle oversubscription. These are shown as follows: –

3. Reject the excess applied number of shares

2. Make Allotment on Pro-rata Basis to all public

3. Use a combination of both the above methods.

Rejection of excess applied number of shares –

Some of the subscribed application are accepted completely whereas other excess numbers of shares are rejected and application money of excess numbers of shares will be refunded.
For example, a company-issued 75,000 shares but application received for 90,000 shares. Then a company can accept 75000 shares and other 15000 excess shares are rejected and their application money is refunded.

Number of shares issued	Number of application received	Number of excess shares	Number of allotted shares	Number of shares to whom money refunded
75,000	90,000	15000	75,000	15,000

2 Make Allotment on Pro-rata Basis to all public

In this method, shares are allotted in proportion to all applicants.
For example: in the view of the above example, shares are allotted
to all the applicants in the fraction of 75,000 shares for every 90,000 shares applied.

Number of appli- cation received	Number of shares issued	Number of excess shares	Appli-cation Money Received (Rs.) @30 per share	Appli- cation money due (Rs.)	Excess Amount left after Application	Amount Adjusted with Allotment (Rs.)
90,000	75,000	15,000	2,700,000	2,250,000	450,000	450,000

Use a combination of both the above methods-

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Some applications are accepted completely whereas some applications are rejected and allotment is made to remaining on a pro-rata basis.
For example, the company received applications for 90000n shares out of which 80000 shares are accepted but 10000 are rejected. And 80000 shares are adjusted in 75000 shares on a pro-rata basis.

Number of appli-cation received	Number of shares issued	Number of excess shares	Appli-cation Money Received (Rs.)@30 per share	Appli-cation money due (Rs.)	Excess Amount left after Appli-cation	Amount Adjusted with Allot-ment (Rs.)	Amount Refund
80,000	75,000	5,000	2,400,000	2,250,000	150,000	150,000	–
10,000	–	10,000	300,000	–	300,000	–	300,000
90,000	75,000	15,000	2,700,000	2,250,000	450,000	150,000	300,000