Question

N Ltd. Issued 1,00,000 equity shares of Rs.10 each to the public at par. Full amount payable at the time of application. Application was received for 1,20,000 shares. Excess application to be credited to share capital account should be_____.

• A. Rs. 12,00,000
• B. Rs. 10,00.000
• C. Rs. 1,20,000
• D. Rs. 1,00,000

Answer 1

The correct option is B Rs. 10,00.000

The total amount of equity share issued to public here is Rs 10,00,000 (Rs 1,00,000*10). Application for shares is 1,20,000 which takes the amount needed to be issued to Rs. 12,00,000. This is the case of over subscription, This situation is termed as Over-subscription where allotment can be made only to the number of shares that are issued. The Company cannot allot more shares than the issued even if there is demand for the shares. Hence, here excess application to be credited to share capital account should be Rs. 10,00,000.