A company invited application for 35,000 equity shares of rs 50 each. The application money received @ 10 per share was Rs 4,50,000. Name the kind of subscription also show working note
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Answer:
Oversubscription is the case when a company receives application more than the issued shares.
These extra 5000 shares can be treated in the following ways:
1. The company may refund the amount received on these 5000 excess shares.
2. Prorata allotment can be made in which the shares can be re-adjusted as per the conditions.
3. The company can resolve the problem be rejecting some of the shares, full allotment to some shares and making pro-rata allotment to the rest of the shares.
4. Reject some of the shares and make pro-rata allotment to rest of the shares.
5. The company can even make pro-rata allotment to all shares and the excess money can be used in fulfilling the calls money.
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