SUBECT: ACCOUNTANCY

CLASS: XII(SESSION 2020-21)

Collaborating Technique
 Explanatory
 Group discussion

Recapulitation
 Entries related with goodwill at the time of admission of a partner

OVER SUBSCRIPTION
A company may receive applications for more number of shares than what it issued; this is the situation of
under subscription.
Since the company cannot allot shares more than the shares offered for subscription, shares can be allotted by
any of the following three alternatives:-
 First alternative :- Rejection of excess Applications
 Second alternative :- Partial or pro rata allotment
 Third alternative :- Combination of above two alternatives

Q.1 M Ltd. issued 50,000 equity shares of 10 each, payable 3 on Application; 4 on Allotment and 4
on First & Final call. Applications were received for 68,000 shares. Applications for 50,000 shares
were accepted and remaining applications were rejected. Allotment was received on 49,000 shares.
Call has not met yet. Pass necessary journal entries in the books of the company.
In the books of M Ltd.
Journal
Date Particulars
Bank A/c ………………………… Dr 2,04,00
To Share Application A/c 0 2,04,000
(Being application money received on 68,000 shares @ Rs. 3 p.s.)
Share Application A/c …… Dr 2,04,00
To Equity Share Capital (50,000 x 3) 0 1,50,000
To Bank (18,000 x3) 54,000
(being share allotted & application money adjusted)
Share Allotment A/c ………. Dr 2,00,00
To Equity Share Capital 0 1,50,000
To SPR 50,000
(Allotment due on 50,000shares @ Rs.4 per share)
Bank ……………………………Dr 1,96,00
Calls in arrears …………… Dr 0
To Share allotment 4,000 2,00,000
(allotment received on 49,000shares)
 Q.2 N Ltd. invited applications for 2,00,000 shares of 10 each payable on applications 4 per share and
6 (including 2 as premium) on allotment and balance of 1st and Final Call. Public had applied for
2,50,000 shares. Excess application utilized towards allotment. Shares were allotted to all applicants
on prorate basis. Pass necessary entries in the following alternative cases:-
(a) All money due was duly received
(b) All money due was duly received except call by Mr. A, who had allotted 5,000 shares.
(c) All money due was duly received except Mr. X holding 4,000 shares failed to pay allotment and call
and Mr Y who had applied for 10,000 shares failed to pay call.
(a)
Date Particulars
Bank A/c ………………………… Dr 10,00,00
To Share Application A/c 0 10,00,000
(Being application money received on 2,50,000 shares @ Rs. 4)
Share Application A/c …… Dr 10,00,00
To Equity Share Capital 0 8,00,000
To Share Allotment 2,00,000
(being 2,00,000 share allotted & application money adjusted)
Share Allotment A/c ………. Dr 12,00,00
To Equity Share Capital 0 8,00,000
To SPR 4,00,000
(Allotment due on 2,00,000 shares @ Rs. 6per share including Rs 2
premium)
Bank ……………………………Dr 10,00,00
To Share allotment 0 10,00,000
(balance of allotment received)
Share 1st & final Call ……. Dr 4,00,000
To Share Capital 4,00,000
(1st call due on 2,00,000 shares @ Rs. 2 per share)
Bank A/c …………………….. Dr 4,00,000
To Share 1st & final call 4,00,000
st
(1 call received on 2,00,000 shares)

(b)

Date Particulars
Bank A/c ………………………… Dr 10,00,00
To Share Application A/c 0 10,00,000
(Being application money received on 2,50,000 shares @ Rs. 4)
Share Application A/c …… Dr 10,00,00
To Equity Share Capital 0 8,00,000
To Share Allotment 2,00,000
(being 2,00,000 share allotted & application money adjusted)
Share Allotment A/c ………. Dr 12,00,00
To Equity Share Capital 0 8,00,000
To SPR 4,00,000
(Allotment due on 2,00,000 shares @ Rs. 6per share including Rs 2
premium)
Bank ……………………………Dr 10,00,00
To Share allotment 0 10,00,000
(balance of allotment received)
 Share 1st & final Call ……. Dr 4,00,000
To Share Capital 4,00,000
(1st call due on 2,00,000 shares @ Rs. 2 per share)
Bank A/c …………………….. Dr 3,90,000
Calls in arrears …………..Dr 10,000
To Share 1st & final call 4,00,000
st
(1 call received on 1,95,000 shares)

(c)
Date Particulars
Bank A/c ………………………… Dr 10,00,00
To Share Application A/c 0 10,00,000
(Being application money received on 2,50,000 shares @ Rs. 4)
Share Application A/c …… Dr 10,00,00
To Equity Share Capital 0 8,00,000
To Share Allotment 2,00,000
(being 2,00,000 share allotted & application money adjusted)
Share Allotment A/c ………. Dr 12,00,00
To Equity Share Capital 0 8,00,000
To SPR 4,00,000
(Allotment due on 2,00,000 shares @ Rs. 6per share including Rs 2
premium)
Bank ……………………………Dr 9,80,000
Calls in arrears ………. Dr 20,000
To Share allotment 10,00,000
(balance of allotment received)
Share 1st & final Call ……. Dr 4,00,000
To Share Capital 4,00,000
st
(1 call due on 2,00,000 shares @ Rs. 2 per share)
Bank A/c …………………….. Dr 3,76,000
Calls in arrears ,………… Dr 24,000 4,00,000
To Share 1st & final call
st
(1 call received on 2,00,000 shares)

WN
No. of shares Application @ Rs. 4 Allotment @ Rs. 6
Applied Allotted Received Capital Excess Due Excess app Amt to be
tfd. to received
allotment
(1) (2) (3) = (1) x (4) = (2) x (5) = (3) – (6) = (2) x (7) = (8) = (6) –
App App (4) Allot Minimum (7)
of (6) & (5)
2,50,000 2,00,000 10,00,000 8,00,000 2,00,000 12,00,000 2,00,000 10,00,000
Bank Sh. Cap Sh. Allot
Mr. X Allotment in arrears = 10,00,000 / 2,00,000 x 4,000 = 20,000 calls in arrears = 4,000 x 2 = 8,000
Mr. Y no. of shares allotted = 4/5 x 10,000 =8,000
Calls in arrears = 8,000 x 2 = 16,000
Applied = 2,50,000 alloted = 2,00,000
Applied = 1 alloted = 2,00,000 / 2,50,000 = 4/5
Applied = 10,000 alloted = 10,000 x 4/5 = 8,000
Q.3 O Ltd. issued 75,000 Equity Shares of Rs. 10 each, at par, payable Rs. 5 on application; Rs, 3 on
Allotment and balance on call. Public subscribed for 1,25,000 shares and allotment was made on prorate
basis. All the money due was duly received except call on 1,200 shares. Pass necessary journal entries in
the books of the company in the following alternative cases:-
(a) Excess application money utilized towards allotment.
(b) Excess application money utilized towards allotment and call.
(a)

Date Particulars
Bank A/c ………………………… Dr 6,25,000
To Share Application A/c 6,25,000
(Being application money received on 1,25,000 shares @ Rs. 5)
Share Application A/c …… Dr 6,25,000
To Equity Share Capital 3,75,000
To Share Allotment 2,25,000
To Bank 25,000
(being 75,000 share allotted & application money adjusted)
Share Allotment A/c ………. Dr 2,25,000
To Equity Share Capital 2,25,000
(Allotment due on 75,000 shares @ Rs. 3 per share)
Share 1st & final Call ……. Dr 1,50,000
To Share Capital 1,50,000
st
(1 call due on 75,000 shares @ Rs. 2 per share)
Bank A/c …………………….. Dr 1,47,600
Calls in arrears 2,400
To Share 1st & final call 1,50,000
(1st call received on 73,800 shares)

(a) WN
No. of shares Application @ Rs. 5 Allotment @ Rs. 3
Applied Allotted Received Capital Excess Due Excess app Amt to be
tfd. to received
allotment
(1) (2) (3) = (1) x (4) = (2) x (5) = (3) – (6) = (2) x (7) = (8) = (6) –
App App (4) Allot Minimum (7)
of (6) & (5)
1,25,000 75,000 6,25,000 3,75,000 2,50,000 2,25,000 2,25,000 0
Bank Sh. Cap Sh. Allot
Excess Application after tfd. To allotment = 25,000 refund - Bank

(b)

Date Particulars
Bank A/c ………………………… Dr 6,25,000
To Share Application A/c 6,25,000
(Being application money received on 1,25,000 shares @ Rs. 5)
Share Application A/c …… Dr 6,25,000
To Equity Share Capital 3,75,000
To Share Allotment 2,25,000
To calls in advance 25,000
(being 75,000 share allotted & application money adjusted)
 Share Allotment A/c ………. Dr 2,25,000
To Equity Share Capital 2,25,000
(Allotment due on 75,000 shares @ Rs. 3 per share)
Share 1st & final Call ……. Dr 1,50,000
To Share Capital 1,50,000
st
(1 call due on 75,000 shares @ Rs. 2 per share)
Bank A/c …………………….. Dr 1,23,000
Calls in arrears 2,000
Calls in advance 25,000 1,50,000
To Share 1st & final call
st
(1 call received on 73,800 shares)

WN
No. of shares Application @ Rs. 5 Allotment @ Rs. 3
Applied Allotted Received Capital Excess Due Excess app Amt to be
tfd. to received
allotment
(1) (2) (3) = (1) x (4) = (2) x (5) = (3) – (6) = (2) x (7) = (8) = (6) –
App App (4) Allot Minimum (7)
of (6) & (5)
1,25,000 75,000 6,25,000 3,75,000 2,50,000 2,25,000 2,25,000 0
Bank Sh. Cap Sh. Allot
Excess Application after tfd. To allotment = 25,000 Calls in advance
Amount due on call = 75,000 x 2 = 1,50,000

Calls to be received on 75,000 shares = 1,50,000 – 25,000 = 1,25,000

Calls in arrears = (125,000 / 75,000) x 1,200 =2,000

Notebook Work:-
Do Q. Nos. 14, 15 and 16