Question

Printkit Limited invited applications for issue of 80,000 equity shares of  Rs 10 each. The amount was payable as follows:

• On Application: ₹ 3  per share
• On Allotment: ₹ 2  per share
• On First and Final Call: Balance

Applications for 1,50,000 shares were received. Applications for 10,000 shares were rejected, and pro-rata allotment was made to the remaining applicants as follows:

• Category A: Applicants for 80,000 shares were allotted 40,000 shares.
• Category B: Applicants for 60,000 shares were allotted 40,000 shares.

Excess money received on application was adjusted toward the amount due on allotment and first and final call. All the amounts due on allotment and first and final call were duly received

Hint:

In cases of pro-rata allotment, calculate excess money received from applications and adjust it toward subsequent payments (e.g., allotment and calls). Refund only the amount corresponding to rejected shares.

Answer 1

\(\text{Journal Entries in the Books of Printkit Limited}\)

Date	Particulars	Amount (₹)
2023	Bank A/c Dr. — 4,50,000    To Equity Share Application A/c — 4,50,000  (Being application money received on 1,50,000 shares at Rs 3 each)	4,50,000
2023	Equity Share Application A/c Dr. — 4,50,000    To Equity Share Capital A/c — 2,40,000    To Bank A/c (Refund) — 30,000    To Equity Share Allotment A/c — 1,80,000  (Being application money adjusted to capital, refund for 10,000 shares, and excess transferred to allotment)	4,50,000
2023	Equity Share Allotment A/c Dr. — 1,60,000    To Equity Share Capital A/c — 1,60,000  (Being allotment money due on 80,000 shares at Rs 2 each)	1,60,000
2023	Bank A/c Dr. — 1,60,000    To Equity Share Allotment A/c — 1,60,000  (Being allotment money received)	1,60,000
2023	Equity Share First and Final Call A/c Dr. — 2,40,000    To Equity Share Capital A/c — 2,40,000  (Being first and final call money due on 80,000 shares at Rs 3 each)	2,40,000
2023	Bank A/c Dr. — 2,10,000    To Equity Share First and Final Call A/c — 2,10,000  (Being first and final call money received, balance adjusted from excess application money)	2,10,000

Explanation:
1. Application Money Received: For 1,50,000 shares at ₹ 3 each.
2. Refund for Rejected Applications: Application money for 10,000 shares refunded.
3. Adjustment of Excess: Excess money from pro-rata allotment adjusted toward allotment and call.
4. Allotment & Call: All dues fully received, either via direct payment or adjustment from excess.

Answer 2

Face value per share = ₹10  
Application money = ₹3 per share 
Allotment money = ₹2 per share 
First & Final Call = ₹10 − ₹(3 + 2) = ₹5 per share 

Step 1: Shares applied for and allotment ratio
Total shares applied for = $1,50,000$ 
Less: Rejected shares = $10,000$ 
Shares considered for allotment = $1,40,000$ 

Category A: Applied $80,000$, allotted $40,000$ → ratio = $80,000 : 40,000 = 2:1$ 
Category B: Applied $60,000$, allotted $40,000$ → ratio = $60,000 : 40,000 = 3:2$ 

Step 2: Application money received
Application money per share = ₹3 
Total received on applications = $1,50,000 \times 3 = ₹4,50,000$ 

Step 3: Application money required for allotted shares
Required application money = $80,000 \times 3 = ₹2,40,000$ 
Excess application money = ₹$(4,50,000 - 2,40,000) = ₹2,10,000$ 

Step 4: Adjustment of excess application money
Category A: 
- Applied $80,000$ shares × ₹3 = ₹2,40,000 
- Allotted $40,000$ shares → application money required = ₹1,20,000 
- Excess = ₹$1,20,000$ 

Category B: 
- Applied $60,000$ shares × ₹3 = ₹1,80,000 
- Allotted $40,000$ shares → application money required = ₹1,20,000 
- Excess = ₹$60,000$ 

Step 5: Allotment money
Allotment per share = ₹2 
Total allotment due = $80,000 \times 2 = ₹1,60,000$ 
Adjustment from excess: ₹$(1,20,000 + 60,000) = ₹1,80,000$ 
Since ₹1,80,000 > ₹1,60,000, the surplus after allotment = ₹20,000, adjusted toward call. 

Step 6: First & Final Call
Call money per share = ₹5 
Total due = $80,000 \times 5 = ₹4,00,000$ 
Adjusted from surplus = ₹20,000 
Amount received on call = ₹$(4,00,000 - 20,000) = ₹3,80,000$ 

Step 7: Journal Entries
(i) Receipt of Application Money:
$$\text{Bank A/c} \quad Dr \quad ₹4,50,000$$ $$\text{To Share Application A/c} \quad ₹4,50,000$$

(ii) Transfer of Application Money (incl. excess adjustment):
$$\text{Share Application A/c} \quad Dr \quad ₹4,50,000$$ $$\text{To Share Capital A/c} \quad ₹2,40,000$$ $$\text{To Share Allotment A/c} \quad ₹1,60,000$$ $$\text{To Share First \& Final Call A/c} \quad ₹20,000$$

(iii) Allotment money due:
$$\text{Share Allotment A/c} \quad Dr \quad ₹1,60,000$$ $$\text{To Share Capital A/c} \quad ₹1,60,000$$

(iv) Receipt of allotment money (fully adjusted):
$$\text{Share Allotment A/c} \quad Dr \quad ₹1,60,000$$ $$\text{To Share Application A/c} \quad ₹1,60,000$$

(v) First and Final Call money due:
$$\text{Share First \& Final Call A/c} \quad Dr \quad ₹4,00,000$$ $$\text{To Share Capital A/c} \quad ₹4,00,000$$

(vi) Receipt of Call Money:
$$\text{Bank A/c} \quad Dr \quad ₹3,80,000$$ $$\text{Share Application A/c} \quad Dr \quad ₹20,000$$ $$\text{To Share First \& Final Call A/c} \quad ₹4,00,000$$

Answer: All amounts were received in full and adjusted. Share capital fully subscribed and paid.