Scribd
Upload
288 views3 pages

Over Subscription

The document discusses how to account for over-subscription of shares in an issue. If an issue is over-subscribed, some applications may be rejected and application money refunded. For applications that receive partial allotment, the excess application money can be used towards allotment or upcoming call money payments. The accounting entries are to debit the share application account and credit bank for refunds. For partial allotments, the share application account is debited and the share allotment account, share calls-in-advance account, and bank account are credited to adjust the application money received.

Uploaded by

kalyanikamineni
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
288 views3 pages

Over Subscription

The document discusses how to account for over-subscription of shares in an issue. If an issue is over-subscribed, some applications may be rejected and application money refunded. For applications that receive partial allotment, the excess application money can be used towards allotment or upcoming call money payments. The accounting entries are to debit the share application account and credit bank for refunds. For partial allotments, the share application account is debited and the share allotment account, share calls-in-advance account, and bank account are credited to adjust the application money received.

Uploaded by

kalyanikamineni
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Issue of Shares

Over Subscription

If an issue is over-subscribed, some applications may be rejected and


application money refunded and in respect of others, only a part of the
shares applied for may be allotted and the excess can be utilized towards
allotment or call money which has fallen due or will soon fall due for
payment.

The entries are:


1) On refund of application money to applicants to whom shares have not
been allotted:
Share Application A/c Dr.
To Bank Account
(Being application money refunded)

2) When only a part of shares applied for are allotted.


Share Application A/c Dr.
To Share Allotment* A/c
(With the application money accepted for allotment)
To Share Calls-in-Advance A/c
(With the amount received in advance)
To Bank A/c
(With any excess amount to be refunded)
(Being application money adjusted)
*Credited to Share Capital A/c subsequently.

(Note: This type of share allotment is termed as Pro-rata allotment and has
been discussed in detail in para 2.8)
Question 4:

Pant Ltd. invited applications for 50,000 equity shares at ₹50 each, which are
payable as an application ₹20, on allotment ₹10 and on first and final call
₹20. The company received applications for 60,000 shares. The directors
accepted application for 50,000 shares and rejected the rest.
Show Journal entries if company refunded the application money to rejected
applicants and allotment money was received for 45,000 shares.

AUTHOR: CA ROCHELLE D’sa

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy