PRACTICAL PROBLEMS

(Over subscription- Some over application refunded and rest used for allotment)

ONGC Ltd. invited applications for 25,000 shares of Rs 100 each payable as under-

On Application Rs 20 On Allotment Rs 40

On First Call Rs 25, and On Final Call Rs 15

Public applied for 40,000 shares, out of which 10,000 shares were rejected and money on 5,000 shares was diverted to share allotment. All the allotment and calls money was received.
Pass journal entries in the journal of ONGC Ltd.

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Solution

Computation Table

Categories

Shares Applied

Shares Alloted

Money received on Application

@ Rs 20 each

Money transfers to Share Capital

@ Rs 20 each

Excess Application money adjusted on Share Allotment

Allotment due

@ Rs 40 each

Refunded

I

10,000

Nil

2,00,000

2,00,000

II

30,000

25,000

6,00,000

5,00,000

1,00,000

10,00,000

40,000

25,000

8,00,000

5,00,000

1,00,000

10,00,000

2,00,000

Books of ONGC Ltd.

Journal Entry

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Bank A/c

Dr.

8,00,000

To Share Application A/c

8,00,000

(Share application received on 40,000 shares of Rs 20 each)

Share Application A/c

Dr.

8,00,000

To Share Capital A/c

5,00,000

To Share Allotment A/c

1,00,000

To Bank A/c

2,00,000

(Share application transferred to Share Capital and excess application money received on 5,000 shares adjusted on share allotment and application received on 10,000 shares refunded)

Share Allotment A/c

Dr.

10,00,000

To Share Capital A/c

10,00,000

(Share allotment due on 25,000 shares of Rs 40 each)

Bank A/c

Dr.

9,00,000

To Share Allotment A/c

9,00,000

(Share allotment received)

Share First Call A/c

6,25,000

To Share Capital A/c

6,25,000

(Share first call due on 25,000 shares of Rs 25 each)

Bank A/c

Dr.

6,25,000

To Share First Call A/c

6,25,000

(Share first call received)

Share Final Call A/c

Dr.

3,75,000

To Share Capital A/c

3,75,000

(Share final call due on 25,000 shares of Rs 15 each)

Bank A/c

Dr.

3,75,000

To Share Final Call A/c

3,75,000

(Share final call received)

Working Notes:

Money received on Application 40,000×20

=

8,00,000

Less: Application money transferred to Share Capital 25,000×20

=

5,00,000

Less: Application money Refunded 10,000×20

2,00,000

Excess money on application

=

1,00,000

Allotment due on 25,000 Shares × Rs 40

=

10,00,000

Less: Adjustment of excess money on application

=

1,00,000

Share Allotment Received

=

9,00,000

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Usha Co. Ltd. issued Rs 12,000 Equity shares of Rs 100 each payable as under-

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Show the journal of the Company.

Q. JS Ltd. invited applications for issuing

80, 000

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10

each at a premium of Rs.

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500

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Pass necessary journal entries for the above transactions in the books of J.S. Ltd.

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Computation Table
Categories	Shares Applied	Shares Alloted	Money received on Application @ Rs 20 each	Money transfers to Share Capital @ Rs 20 each	Excess Application money adjusted on Share Allotment	Allotment due @ Rs 40 each	Refunded
I	10,000	Nil	2,00,000				2,00,000
II	30,000	25,000	6,00,000	5,00,000	1,00,000	10,00,000

	40,000	25,000	8,00,000	5,00,000	1,00,000	10,00,000	2,00,000

On Application Rs 20		On Allotment	Rs 40
On First Call Rs 25, and		On Final Call	Rs 15

Books of ONGC Ltd.
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Bank A/c	Dr.		8,00,000
	To Share Application A/c				8,00,000
	(Share application received on 40,000 shares of Rs 20 each)

	Share Application A/c	Dr.		8,00,000
	To Share Capital A/c				5,00,000
	To Share Allotment A/c				1,00,000
	To Bank A/c				2,00,000
	(Share application transferred to Share Capital and excess application money received on 5,000 shares adjusted on share allotment and application received on 10,000 shares refunded)

	Share Allotment A/c	Dr.		10,00,000
	To Share Capital A/c				10,00,000
	(Share allotment due on 25,000 shares of Rs 40 each)

	Bank A/c	Dr.		9,00,000
	To Share Allotment A/c				9,00,000
	(Share allotment received)

	Share First Call A/c			6,25,000
	To Share Capital A/c				6,25,000
	(Share first call due on 25,000 shares of Rs 25 each)

	Bank A/c	Dr.		6,25,000
	To Share First Call A/c				6,25,000
	(Share first call received)

	Share Final Call A/c	Dr.		3,75,000
	To Share Capital A/c				3,75,000
	(Share final call due on 25,000 shares of Rs 15 each)

	Bank A/c	Dr.		3,75,000
	To Share Final Call A/c				3,75,000
	(Share final call received)

Money received on Application 40,000×20	=	8,00,000
Less: Application money transferred to Share Capital 25,000×20	=	5,00,000
Less: Application money Refunded 10,000×20		2,00,000
Excess money on application	=	1,00,000

Allotment due on 25,000 Shares × Rs 40	=	10,00,000
Less: Adjustment of excess money on application	=	1,00,000
Share Allotment Received	=	9,00,000