X Ltd. issued 10,000 shares of Rs 10 each payable Rs 3 on application; Rs 2 on allotment and rest on call. If received applications for 12,000 shares. Shares were allotted on pro-rata basis. How much amount will be received in cash on allotment of shares? (a) Rs 20,000 (b) Rs 14,000 (c) 16,000 (d) None of these
Answers
The first entry will be of receiving Share application money and the second entry will be of adjusting application money in Share Capital for 10000 shares at Rs. 3 per share.
Bank A/c Dr. 36,000
To Share Application A/c 36,000
(Being Application amount received at Rs. 3 per application on 12000 Shares)
Share Application A/c Dr. 36,000
To Share Capital A/c 30,000
To Share Allotment A/c 6.000
(Being Share Application money at Rs. 3 per share for 10000 Shares adjusted to Share Capital A/c and excess application for 2000 shares adjusted to Share Allotment Account)
On Allotment and thereafter, due entry comes first, and then the receipt entry
Share Allotment A/c Dr. 20,000
To Share Capital A/c 20,000
(Being Share allotment account adjusted to Share Capital)
Bank A/c Dr 14,000
To Share Allotment A/c 14,000
(Being Share allotment money received for 10000 shares @ 2 per share after adjusting excess of Rs, 60000 paid on application)
So option (b) Rs. 14,000 is the correct answer