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

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 (Receipt of application money for 1,50,000 shares at ₹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 (Adjustment of application money: ₹2,40,000 transferred to capital, ₹30,000 refunded for 10,000 shares, and ₹1,80,000 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 (Allotment money due on 80,000 shares at ₹2 each)	1,60,000
2023	Bank A/c Dr. — 1,60,000 To Equity Share Allotment A/c — 1,60,000 (Receipt of allotment money)	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 (First and final call due on 80,000 shares at ₹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 (Receipt of first and final call money; balance adjusted from excess application money)	2,10,000

Explanation:

1. Application money was received for 1,50,000 shares at ₹3 per share.
2. Application money for 10,000 shares was refunded.
3. Excess application money was adjusted towards allotment and call.
4. Allotment and call amounts were fully realized through cash and adjustment.