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

Answer:

Bank A/c ------- Dr.( 12,000×100) 12,00,000

To Equity share application A/c. 12,00,000

Equity Share Application A/c----Dr 12,00,000

To Equity share capital A/c 10,00,000

To Equity Share allotment A/c. 2,00,000

( 10,000×100) ,( 2000×100)

Explanation:

It's case of Oversubscription , 10,000 Equity shares were issued but the applications recieved was 12,000 as the Question says oversubscribed by 2000 so (10,000+2000) and it says that allotment was done on Prorata basis so we are using Share allotment A/c in the second entry .

The question mentions equity shares hence equity share is used in my solution.

In case the question was that company rejected the 2000 shares so we would use Bank A/c instead of Share Allotment A/c