Question 23 Chapter 8 of +2-Part-1
23. (Oversubscription/ Prorata Allotment) Voltas Ltd. has issued prospectus inviting applications for 43,000 shares of Rs. 20 each payable Rs. 8 on application : Rs. 7 on allotment and Rs. 5 on final call. Applications for 83,000 shares were received. Due to over subscription the allotment was made as follows :
| Category | Shares applied | Shares allotted |
| 1 | 8,000 | 8,000 |
| 2 | 12,000 | 9,000 |
| 3 | 18,000 | 11,000 |
| 4 | 45,000 | 15,000 |
| 83,000 | 43,000 |
You are required to prepare a statement treatment under the following:
- When application money received in excess is not retained.
- When application money received in excess is retained for allotment.
- When application money received in excess is retained for allotment and call.
The solution of Question 23 Chapter 8 of +2 Part-1: –
| Journal |
|||||
| Date | Particulars |
L.F. | Debit | Credit | |
| A) | Bank A/c | Dr. | 6,64,000 | ||
| To Share Application A/c | 6,64,000 | ||||
| (Being application money received on 83,000 share shares @ Rs. 8 per share) | |||||
| For case (a) (check WN-1) | |||||
| B) | Share Application A/c | Dr. | 6,64,000 | ||
| To Share capital A/c | 3,44,000 | ||||
| To Bank A/c | 3,20,000 | ||||
| (Being the application money transferred to share capital A/c & excess refunded ) | |||||
| For case (b) (check WN-2) | |||||
| B) | Share Application A/c | Dr. | 6,64,000 | ||
| To Share capital A/c | 3,44,000 | ||||
| To Share Allotment A/c | 1,85,000 | ||||
| To Bank A/c | 1,35,000 | ||||
| (Being application money adjusted as per board resolution ) | |||||
| For case (c) (check WN-3) | |||||
| B) | Share Application A/c | Dr. | 6,64,000 | ||
| To Share capital A/c | 3,44,000 | ||||
| To Share Allotment A/c | 1,85,000 | ||||
| To Calls in advance A/c | 75,000 | ||||
| To Bank A/c | 60,000 | ||||
| (Being application money adjusted as per board resolution ) | |||||
Working notes of Question 23 Chapter 8 of +2-Part-1:
WN-1 – When application money received in excess is not retained.
| Categories | Shares Applied | Shares Allotted | App. Money Received | App. Due | Balance | Refund |
| Rs. | Rs. | Rs. | Rs. | |||
| 1 | 8,000 | 8,000 | 64,000 | 64,000 | – | – |
| 2 | 12,000 | 9,000 | 96,000 | 72,000 | 24,000 | 24,000 |
| 3 | 18,000 | 11,000 | 1,44,000 | 88,000 | 56,000 | 56,000 |
| 4 | 45,000 | 15,000 | 3,60,000 | 1,20,000 | 2,40,000 | 2,40,000 |
| Total | 83,000 | 43,000 | 6,64,000 | 3,44,000 | 3,20,000 | 3,20,000 |
WN-2 – When application money received in excess is retained for allotment.
| Categories | Shares Applied | Shares Allotted | App. Money Received | App. Due | Balance | Allotment Money Adjusted | Refund |
| Rs. | Rs. | Rs. | Rs. | Rs. | |||
| 1 | 8,000 | 8,000 | 64,000 | 64,000 | – | – | |
| 2 | 12,000 | 9,000 | 96,000 | 72,000 | 24,000 | 24,000 | – |
| 3 | 18,000 | 11,000 | 1,44,000 | 88,000 | 56,000 | 56,000 | – |
| 4 | 45,000 | 15,000 | 3,60,000 | 1,20,000 | 2,40,000 | 1,05,000 | 1,35,000 |
| Total | 83,000 | 43,000 | 6,64,000 | 3,44,000 | 3,20,000 | 1,85,000 | 1,35,000 |
WN-3 – When application money received in excess is retained for allotment and call.
| Categories | Shares Applied | Shares Allotted | App. Money Received | App. Due | Balance | Allotment Money Adjusted | Call Adjustments | Refund |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |||
| 1 | 8,000 | 8,000 | 64,000 | 64,000 | – | – | ||
| 2 | 12,000 | 9,000 | 96,000 | 72,000 | 24,000 | 24,000 | – | |
| 3 | 18,000 | 11,000 | 1,44,000 | 88,000 | 56,000 | 56,000 | – | |
| 4 | 45,000 | 15,000 | 3,60,000 | 1,20,000 | 2,40,000 | 1,05,000 | 75,000 | 60,000 |
| Total | 83,000 | 43,000 | 6,64,000 | 3,44,000 | 3,20,000 | 1,85,000 | 75,000 | 60,000 |
It all about Question 23 Chapter 8 of +2-Part-1, If you have any problem please comment below.
End of Solution
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Question 20 Chapter 8 of +2 Part-1 – USHA Publication 12 Class Part – 1
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Chapter No. 8 – Company Accounts (Share Capital)
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Chapter No. 9 – Company Accounts (Issue of Debentures)
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