Question

Sangam Ltd. invited applications for 10,000 Equity Shares of ₹ 100 each issued at par. The amount was payable on application. The issue was oversubscribed by 2,000 shares and allotment was made on pro rata basis. Pass necessary Journal entries.

Answer 1

In the books of Sangam Ltd. Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Bank A/c (12,000 × 100)	Dr.		12,00,000
	To Share Application and Allotment A/c (12,000 × 100)				12,00,000
	(Being application money received on 12,000 equity shares)
	Share Application and Allotment A/c	Dr.		12,00,000
	To Share Capital A/c (10,000 × 100)				10,00,000
	To Bank A/c (2,000 × 100)				2,00,000
	(Being share application and allotment money adjusted for 10,000
	shares and balance money refunded)

Note: Since the entire amount is receivable on application so the excess money on 2,000 shares has been refunded and allotment is made on a pro-rata basis to 12,000 shareholders.