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8.14 Double Entry Book Keeping—CBSE XII
Illustration 8.
Hindustan Steel Ltd. invited applications for 4,00,000 equity shares of ` 10 each payable as: ` 3
on application, ` 4 on allotment and ` 3 on call. Applications for 13,10,000 shares were received
and allotment was made as follows:
Category Shares Applied Shares Allotted
A 1,00,000 1,00,000
B 1,00,000 80,000
C 70,000 20,000
D 1,80,000 40,000
E 2,00,000 40,000
F 6,60,000 1,20,000
Prepare the statement showing the adjustment of Application Money received:
(a) if excess Application Money was adjusted towards sum due on allotment,
(b) if excess Application Money was adjusted towards other sum due on shares.
Solution: Case (a) Excess Application Money was adjusted towards Sum Due on Allotment:
Category Shares Shares Application Adjustment of Application Money Received
Applied Allotted Money Share Shares Calls-in- Refund
Received (`) Capital (`) Allotment (`) Advance (`) `
A 1,00,000 1,00,000 3,00,000 3,00,000 ... ... ...
B 1,00,000 80,000 3,00,000 2,40,000 60,000 ... ...
C 70,000 20,000 2,10,000 60,000 80,000 ... 70,000
D 1,80,000 40,000 5,40,000 1,20,000 1,60,000 ... 2,60,000
E 2,00,000 40,000 6,00,000 1,20,000 1,60,000 ... 3,20,000
F 6,60,000 1,20,000 19,80,000 3,60,000 4,80,000 ... 11,40,000
Working Notes:
Category A: No Excess Application Money.
`
Category B: Application Money Received (1,00,000 × ` 3) 3,00,000
Adjusted: Application Money—Share Capital (80,000 × ` 3) 2,40,000
Adjusted towards Shares Allotment 60,000
Category C: Application Money Received (1,00,000 × ` 3) 3,00,000
Adjusted: Application Money—Share Capital (80,000 × ` 3) 2,40,000
Surplus adjusted towards Shares Allotment 60,000
Category D: Application Money Received (1,80,000 × ` 3) 5,40,000
Adjusted: Application Money—Share Capital (40,000 × ` 3) 1,20,000
Excess Application Money 4,20,000
Adjusted towards Shares Allotment (40,000 × ` 4) 1,60,000
Surplus to be refunded 2,60,000
Category E: Application Money Received (2,00,000 × ` 3) 6,00,000
Adjusted: Application Money—Share Capital (40,000 × ` 3) 1,20,000
Excess Application Money 4,80,000
Adjusted towards Shares Allotment (40,000 × ` 4) 1,60,000
Surplus to be refunded 3,20,000
Category F: Application Money Received (6,60,000 × ` 3) 19,80,000
Adjusted: Share Application—Share Capital (1,20,000 × ` 3) 3,60,000
Excess Application Money 16,20,000
Adjusted towards Shares Allotment (1,20,000 × ` 4) 4,80,000
Surplus to be refunded 11,40,000