Question 24 Chapter 8 of +2-Part-1
24. (Prorata Allotment/Refund) A company invited applications for 50,000 shares of 10 each on the following terms :
On application RS. 3
On allotment Rs. 2
On first and final call Rs. 5
Applications were received for 1,10,000 shares. It was decided (i) to refuse allotment to the applications for 10,000 shares (ii) to allot 50 percent to Mr. Black who applied for 20,000 shares (iii) to allot in full to Mr. Brown who applied for 10,000 shares (iv) to allot balance of available shares equitably among the other applicants and (v) to utilize excess application money in part payment of allotment and final call.
Give journal entries till the stage of allotment assuming that the entire sum due on allotment is received in full.
The solution of Question 24 Chapter 8 of +2 Part-1: –
| Journal |
|||||
| Date | Particulars |
L.F. | Debit | Credit | |
| A) | Bank A/c | Dr. | 3,30,000 | ||
| To Share Application A/c | 3,30,000 | ||||
| (Being application money received on 1,10,000 shares @ Rs. 3 per share) | |||||
| B) | Share Application A/c | Dr. | 3,30,000 | ||
| To Share capital A/c WN-1 | 1,50,000 | ||||
| To Share Allotment A/c WN-1 | 80,000 | ||||
| To Calls in advance A/c WN-1 | 70,000 | ||||
| To Bank A/c WN-1 | 30,000 | ||||
| (Being application money on 50,000 shares transferred to share capital A/c & refunded on 10,000 rejected applications) | |||||
| (C) | Share AllotmentA/c | Dr. | 1,00,000 | ||
| To Share capital A/c | 1,00,000 | ||||
| (Being allotment money due on 50,000 shares @ Rs. 2 per share) | |||||
| (D) | Bank A/c WN-2 | Dr. | 20,000 | ||
| To Share Allotment A/c | 20,000 | ||||
| (Being balance allotement money received) | |||||
Working notes of Question 24 Chapter 8 of +2-Part-1:
WN – 1 – Analysis Table
| Categories | Shares Applied | Shares Allotted | App. Money Received | App. Due | Surplus | Allotment Money Due | Surplus adjusted towards allotment |
Surplus | 1st Call Money due |
Surplus adjusted towards 1st call |
Surplus | Refund |
| (1) | (2) | 3 = (1) X Rs.3 |
(4)= (2) X 3 |
(5)= (3) – (4) |
(6)= (2) X Rs2 |
(7) | (8)= (5) – (7) |
(9)= (2) X Rs.5 |
(10) | (11)= (8)-(10) |
12 | |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |||||
| Refused | 10,000 | – | 30,000 | – | – | – | – | – | – | – | – | 30,000 |
| Mr. Black | 20,000 | 10,000 | 60,000 | 30,000 | 30,000 | 20,000 | 20,000 | 10,000 | 50,000 | 10,000 | – | – |
| Mr. Brown | 10,000 | 10,000 | 30,000 | 30,000 | – | 20,000 | – | – | 50,000 | – | – | – |
| Pro. Rata | 70,000 | 30,000 | 2,10,000 | 90,000 | 1,20,000 | 60,000 | 60,000 | 60,000 | 1,50,000 | 60,000 | – | – |
| Total | 1,10,000 | 50,000 | 3,30,000 | 1,50,000 | 1,50,000 | 1,00,000 | 80,000 | 70,000 | 2,50,000 | 70,000 | – | 30,000 |
WN – 2 – Calculation of Amount received on allotment: –
| Rs. | |
| Allotment amount due | 1,00,000 |
| Less: –already received in the form of excess app. Money | 80,000 |
| Total | 20,000 |
It all about Question 24 Chapter 8 of +2-Part-1, If you have any problem please comment below.
End of Solution
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Chapter No. 8 – Company Accounts (Share Capital)
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Chapter No. 9 – Company Accounts (Issue of Debentures)
Chapter No. 10 – Company Accounts (Redemption of Debentures)
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