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Pro Rata Over Subscription and Calls in Arrears

Arjun EP

Published on: July 10, 2020

Pro Rata and Over Subscription

Sometimes when company is well-known or earning high profit, shares applicants like to purchase more shares.

In such a condition public applied more than offered shares of the company.

When share applicants applied more than offered share, it is called over subscription.

Normally, the company allots shares in proportion.

But sometimes company uses these three methods.

1. Full rejection of excess applications

2. Pro-rata allotment

3. Mixed methods

Keep in mind

According to the guidelines of SEBI (Securities and Exchange Board of India), a company cannot reject directly any application. However, it can do so where the information is incomplete like there is not proper information on the application and money is insufficient.

In some countries, the company rejects share applications directly on over subscription.

Full rejection of excess applications

Under this method, company rejects excess applications.

Company returns excess to the applicants with a letter of regret.

Pro rata allotment

Under this method, company allots excess applications in proportion.

For example the company received 5,000 applications and allotted 1,000 shares.

Now 5,000: 1,000 or 5: 1.

Here the applicant of five shares received one share.

Mixed allotment

Under this method,

Company rejects some applications (nil)

Some applications allot in full (100%)

Some excess applications are allotted in proportion (pro-rata).

Calls in Arrears

When shareholder(s) cannot pay due amount on due date, it is called calls in arrears.

It may be on allotment, first call or second and final call.

There is never arrear in application.

According to Company Act, the company should send writing notice or letter to shareholders about calls in arrears.

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 22 [pro rata over subscription and calls in arrears]

HCL Company Ltd issued 80,000 equity shares of $/₹/Rs 100 each. The amount payable as under:

On application Rs 25

On allotment Rs 40

On first and final call Rs 35

The company received applications for 100,000 shares. Applicants for 10,000 shares were rejected. Applicants for 50,000 shares were allotted full and remaining shares were allotted on pro-rata basis. The BOD has authority to utilize excess money toward allotment. All the shares were issued. All the amounts were received except a shareholder holding 2,000 shares under pro-rata failed to pay call money.

Required: Journal entries

[Answer: Return amount = Rs 250,000; Excess amount = Rs 250,000;

Amount received on allotment = Rs 27,30,000; Arrear on calls = Rs 70,000]

SOLUTION:

Given and working note:

Shares

Issued

Price

Installation

Arrears and

Advance

Share

Applied

Shares

Allotted

80,000

100

Application

Allotment

First and final call

− 2,000

10,000

50,000

40,000

Nil

50,000

30,000

100,000

80,000

Return money

= Rejected shares × Always application money

= 10,000 shares × Rs 25

= Rs 250,000*

Excess money

= Difference in pro-rata shares × Always application money

= (40,000 – 30,000 shares) × Rs 25

= 10,000 × Rs 25

= Rs 250,000^#

Calls in arrears on calls = 2,000 shares x Rs 35 = Rs 70,000^A

Journal Entries

In the book of HCL Company Ltd

Date	Particulars		LF	Amount	Amount
Received	Amount received on application
	Bank account To Equity share application account (Being- amount received on 100,000 shares @ Rs 25)	Dr		25,00,000	25,00,000
Transfer	Amount transfer of application
	Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted)	Dr		25,00,000	20,00,000 2,50,000* 2,50,000^#
Due	Amount due/receivable on allotment
	Equity share allotment account To Equity share capital account (Being- amount due/receivable on allotment)	Dr		32,00,000	32,00,000
Received	Amount received on allotment
	Bank account To Equity share allotment account (Being- amount received on 80,000 shares @ Rs 40 And excess adjusted 32,00,000 – 250,000^# = 29,50,000)	Dr		29,50,000	29,50,000
Due	Amount due/receivable on first and final call
	Equity share first and final call account To Equity share capital account (Being- amount due/receivable on calls)	Dr		28,00,000	28,00,000
Received	Amount received on first and final call
	Bank account Calls in arrears account To Equity share first and final call account (Being- amount received on 80,000 – 2,000 = 78,000 shares @ Rs 35 and arrears adjusted)	Dr Dr		27,30,000 70,000^A	28,00,000

###########

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###########

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 23 [pro rata over subscription and calls in arrears]

NT Company Ltd has authorized capital $/₹/Rs 50,00,000 divided into shares of Rs 100 each. The Company issued 30,000 equity shares at par. The amount payable as under:

On application Rs 20

On allotment Rs 50

On first and final call Rs 30

The Company received applications for 60,000 shares. The BOD decided to allotment in following basis:

Applications for 15,000 shares Pro-rata

Applications for 20,000 shares full

Applications for 25,000 shares Nil

Excess money can be utilizes toward allotment. The entire amount was duly received except a shareholder who held 1,000 shares under pro-rata basis failed to pay allotment and calls.

Required: Journal entries

[Answer: Arrears on allotment = Rs 40,000; Allotment bank = Rs 13,60,000;

Arrears on final call = Rs 30,000]

SOLUTION:

Given and working note:

Shares Issued	Issued Price	Installation		Arrears and Advance	Share Applied	Shares Allotted
~~50,000~~ 30,000	100	Application Allotment First & final call	20 50 30	. −1,000 −1,000	15,000 20,000 25,000	10,000 20,000 Nil
					60,000	30,000

Return or refunded money

= Rejected or Nil shares × Always application amount

= 25,000 shares × Rs 20

= Rs 500,000^#

Excess money

= Difference in pro-rata shares × Always application money

= (15,000 – 10,000 shares) × Rs 20

= 5,000 × Rs 20

= Rs 100,000*

When there is a call in arrears on allotment, this formula can be applied:

Amount need on allotment (30,000 shares @ Rs 50)

Less: Excess amount of pro-rata

15,00,000

(100,000*)

Arrears seem on allotment (1,000 Shears @ Rs 50)

Less: Paid = (Rs 100,000* × 1,000) ÷ 10,000

50,000

(10,000)

14,00,000

(40,000)

Received amount on allotment (bank)

13,60,000

Where: Paid = (Excess amount × Arrears shares) ÷ Pro-rata allotted shares

Journal Entries

In the book of NT Company Ltd

Date	Particulars		LF	Amount	Amount
Received	Amount received on application
	Bank account To Equity share application account (Being- amount received on 60,000 shares @ Rs 20)	Dr		12,00,000	12,00,000
Transfer	Amount transfer of application
	Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted)	Dr		12,00,000	6,00,000 5,00,000* 1,00,000^#
Due	Amount due/receivable on allotment
	Equity share allotment account To Equity share capital account (Being- amount due/receivable on allotment)	Dr		15,00,000	15,00,000
Received	Amount received on allotment
	Bank account Calls in arrears account To Equity share allotment account (Being- amount received from working note)	Dr Dr		13,60,000 40,000	14,00,000
Due	Amount due/receivable on first and final call
	Equity share first and final call account To Equity share capital account (Being- amount due/receivable on calls)	Dr		9,00,000	9,00,000
Received	Amount received on first and final call
	Bank account Calls in arrears account To Equity share first and final call account (Being- amount received on 30,000 – 1,000 = 29,000 shares @ Rs 30 and arrears adjusted)	Dr Dr		870,000 30,000	9,00,000

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 24 [pro rata over subscription and calls in arrears]

RK Company Ltd issued 70,000 equity shares of $/₹/Rs 100 each at 10% discount. The amount payable as under:

On application Rs 20; on allotment Rs 30; on first Rs 25; on final call Rs 15

The company received applications for 100,000 shares. The BOD decided to allotment in following basis:

Applications for 50,000 shares Pro-rata

Applications for 40,000 shares full

Applications for 10,000 shares Nil

Excess money can be utilizes toward allotment. All the shares were issued and due amount were received except a shareholder who held 1,000 shares under pro-rata basis failed to pay allotment and calls.

Required: Journal entries

[Answer: Arrears on allotment = Rs 16,667; Allotment bank = Rs 16,83,333;

Arrears on final call = Rs 25,000; arrears on final call = 15,000]

SOLUTION:

Shares Issued	Issued Price	Installation		Arrears and Advance	Share Applied	Shares Allotted
70,000	100–10D	Application Allotment First call Final call	20 30 (40C–10D) 25 15	. −1,000 −1,000 −1,000	50,000 40,000 10,000	30,000^A 40,000 Nil
					100,000	70,000

Return or refunded money

= Rejected or Nil shares × Always application amount

= 10,000 shares × Rs 20

= Rs 200,000^#

Excess money

= Difference in pro-rata shares × Always application money

= (50,000 – 30,000 shares) × Rs 20

= 20,000 × Rs 20

= Rs 400,000*

When there is a call in arrears on allotment, this formula can be applied:

Amount need on allotment (70,000 shares @ Rs 30)

Less: Excess amount of pro-rata

21,00,000

(400,000*)

Arrears seem on allotment (1,000 Shears @ Rs 30)

Less: Paid = (Rs 400,000* × 1,000 shares) ÷ 30,000^A

30,000

(13,333)

17,00,000

(16,667)

Received amount on allotment (bank)

16,83,333

Where: Paid = (Excess amount × Arrears shares) ÷ Pro-rata allotted shares

Calls in arrears on first call = 1,000 shares × Rs 25 final call money = Rs 25,000

Calls in arrears on final call = 1,000 shares × Rs 15 final call money = Rs 15,000

Alternatively,

Excess amount per share = Excess amount ÷ Pro-rata allotted = Rs 400,000 ÷ 30,000 shares = Rs 13.333

Calls in arrears per share = Allotment amount ‒ Excess amount per share = Rs 30 ‒ Rs 13.33 = Rs 16.667

Calls in arrears on allotment = 1,000 shares × Rs 16.667 = Rs 16,667

Journal Entries

In the book of RK Company Ltd

Date	Particulars		LF	Amount	Amount
Received	Amount received on application
	Bank account To Equity share application account (Being- amount received on 100,000 shares @ Rs 30)	Dr		20,00,000	20,00,000
Transfer	Amount transfer of application
	Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted)	Dr		20,00,000	14,00,000 2,00,000* 4,00,000^#
Due	Amount due/receivable on allotment
	Equity share allotment account Discount on issue of shares account To Equity share capital account (Being- amount due on allotment and discount adjusted)	Dr Dr		21,00,000 7,00,000	28,00,000
Received	Amount received on allotment
	Bank account Calls in arrears account To Equity share allotment account (Being- amount received from working note)	Dr Dr		16,83,333 16,667	17,00,000
Due	Amount due/receivable on first call Equity share first call account To Equity share capital account (Being- amount due/receivable on first call)	Dr		17,50,000	17,50,000
Received	Amount received on first call
	Bank account (b/f) Calls in arrears account To Equity share first call account (Being- amount received on 70,000 – 1,000 = 69,000 shares @ Rs 25 after arrears adjusted)	Dr Dr		17,25,000 25,000	17,50,000
Due	Amount due/receivable on final call
	Equity share final call account To Equity share capital account (Being- amount due/receivable on final call)	Dr		10,50,000	10,50,000
Received	Amount received on final call
	Bank account (b/f) Calls in arrears account To Equity share final call account (Being- amount received on 70,000 – 1,000 = 69,000 shares @ Rs 15 after arrears adjusted)	Dr Dr		10,35,000 15,000	10,50,000

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 25 [pro rata over subscription and calls in arrears]

RK Company Ltd issued 70,000 equity shares of $/₹/Rs 100 each at 10% premium. The amount payable as under:

On application Rs 20

On allotment Rs 40

On first Rs 25

On final call Rs 15

The company received applications for 100,000 shares. The BOD decided to allotment in following basis:

Applications for 50,000 shares Pro-rata

Applications for 40,000 shares full

Applications for 10,000 shares Nil

Required: Journal entries

[Answer: Arrears on allotment = Rs 16,667; Allotment bank = Rs 16,83,333;

Arrears on final call = Rs 25,000; arrears on final call = 15,000]

SOLUTION:

Shares Issued	Issued Price	Installation		Arrears and Advance	Share Applied	Shares Allotted
70,000	100+10P	Application Allotment First call Final call	20 40 (30C+10P) 25 15	. −1,000 −1,000 −1,000	50,000 40,000 10,000	30,000^A 40,000 Nil
					100,000	70,000

Return or refunded money

= Rejected or Nil shares × Always application amount

= 10,000 shares × Rs 20

= Rs 200,000^#

Excess money

= Difference in pro-rata shares × Always application money

= (50,000 – 30,000 shares) × Rs 20

= 20,000 × Rs 20

= Rs 400,000*

When there is a call in arrears on allotment, this formula can be applied:

Amount need on allotment (70,000 shares @ Rs 30)

Less: Excess amount of pro-rata

28,00,000

(400,000*)

Arrears seem on allotment (1,000 Shears @ Rs 40)

Less: Paid = (Rs 400,000* × 1,000 shares) ÷ 30,000^A

40,000

(13,333)

24,00,000

(26,667)

Received amount on allotment (bank)

23,73,333

Where: Paid = (Excess amount × Arrears shares) ÷ Pro-rata allotted shares

Calls in arrears on first call = 1,000 shares × Rs 25 final call money = Rs 25,000

Calls in arrears on final call = 1,000 shares × Rs 15 final call money = Rs 15,000

Alternatively,

Excess amount per share = Excess amount ÷ Pro-rata allotted = Rs 400,000 ÷ 30,000 shares = Rs 13.333

Calls in arrears per share = Allotment amount ‒ Excess amount per share = Rs 40 ‒ Rs 13.33 = Rs 26.667

Calls in arrears on allotment = 1,000 shares × Rs 26.667 = Rs 26,667

Journal Entries

In the book of RK Company Ltd

Date	Particulars		LF	Amount	Amount
Received	Amount received on application
	Bank account To Equity share application account (Being- amount received on 100,000 shares @ Rs 30)	Dr		20,00,000	20,00,000
Transfer	Amount transfer of application
	Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted)	Dr		20,00,000	14,00,000 2,00,000* 4,00,000^#
Due	Amount due/receivable on allotment
	Equity share allotment account To Equity share capital account To Share premium (security premium) account (Being- amount due on allotment and discount adjusted)	Dr		28,00,000	21,00,000 7,00,000
Received	Amount received on allotment
	Bank account Calls in arrears account To Equity share allotment account (Being- amount received from working note)	Dr Dr		23,73,333 26,667	24,00,000
Due	Amount due/receivable on first call
	Equity share first call account To Equity share capital account (Being- amount due/receivable on first call)	Dr		17,50,000	17,50,000
Received	Amount received on first call
	Bank account (b/f) Calls in arrears account To Equity share first call account (Being- amount received on 70,000 – 1,000 = 69,000 shares @ Rs 25 after arrears adjusted)	Dr Dr		17,25,000 25,000	17,50,000
Due	Amount due/receivable on final call
	Equity share first call account To Equity share capital account (Being- amount due/receivable on first call)	Dr		10,50,000	10,50,000
Received	Amount received on final call
	Bank account (b/f) Calls in arrears account To Equity share final call account (Being- amount received on 70,000 – 1,000 = 69,000 shares @ Rs 15 after arrears adjusted)	Dr Dr		10,35,000 15,000	10,50,000

#####

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#####

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 26 [pro rata over subscription and calls in arrears]

RK Company Ltd issued 70,000 equity shares of $/₹/Rs 100 each at 10% premium. The amount payable as under:

On application Rs 20; on allotment Rs 40; on first Rs 25; on final call Rs 15

The company received applications for 100,000 shares. The BOD decided to allotment in following basis:

Applications for 50,000 shares Pro-rata

Applications for 40,000 shares full

Applications for 10,000 shares Nil

Required: Journal entries

[Answer: Arrears on allotment = Rs 16,667; Allotment bank = Rs 16,83,333;

Arrears on final call = Rs 37,500; arrears on final call = 22,500]

SOLUTION:

Shares Issued	Issued Price	Installation		Arrears and Advance	Share Applied	Shares Allotted
70,000	100+10P	Application Allotment First call Final call	20 40 (30C+10P) 25 15	. −1,000 −1,000−500 −1,000−500	50,000 40,000 10,000	30,000^A 40,000 Nil
					100,000	70,000

Return or refunded money

= Rejected or Nil shares × Always application amount

= 10,000 shares × Rs 20

= Rs 200,000^#

Excess money

= Difference in pro-rata shares x Always application money

= (50,000 – 30,000 shares) × Rs 20

= 20,000 × Rs 20

= Rs 400,000*

When there is a call in arrears on allotment, this formula can be applied:

Amount need on allotment (70,000 shares @ Rs 30)

Less: Excess amount of pro-rata

28,00,000

(400,000*)

Arrears seem on allotment (1,000 Shears @ Rs 40)

Less: Paid = (Rs 400,000* × 1,000) ÷ 30,000^A

40,000

(13,333)

24,00,000

(26,667)

Received amount on allotment (bank)

23,73,333

Where: Paid = (Excess amount × Arrears shares) ÷ Pro-rata allotted shares

Calls in arrears on first call = (1,000+500) shares × Rs 25 final call money = Rs 37,500

Calls in arrears on final call = (1,000+500) shares × Rs 15 final call money = Rs 22,500

Alternatively,

Excess amount per share = Excess amount ÷ Pro-rata allotted = Rs 400,000 ÷ 30,000 shares = Rs 13.333

Calls in arrears per share = Allotment amount ‒ Excess amount per share = Rs 40 ‒ Rs 13.33 = Rs 26.667

Calls in arrears on allotment = 1,000 shares × Rs 26.667 = Rs 26,667

Journal Entries

In the book of RK Company Ltd

Date	Particulars		LF	Amount	Amount
Received	Amount received on application
	Bank account To Equity share application account (Being- amount received on 100,000 shares @ Rs 30)	Dr		20,00,000	20,00,000
Transfer	Amount transfer of application
	Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted)	Dr		20,00,000	14,00,000 2,00,000* 4,00,000^#
Due	Amount due/receivable on allotment
	Equity share allotment account To Equity share capital account To Share premium (security premium) account (Being- amount due on allotment and discount adjusted)	Dr		28,00,000	21,00,000 7,00,000
Received	Amount received on allotment
	Bank account Calls in arrears account To Equity share allotment account (Being- amount received from working note)	Dr Dr		23,73,333 26,667	24,00,000
Due	Amount due/receivable on first call
	Equity share first call account To Equity share capital account (Being- amount due/receivable on first call)	Dr		17,50,000	17,50,000
Received	Amount received on first call
	Bank account (b/f) Calls in arrears account To Equity share first call account (Being- amount received on 70,000 – 1,500 = 68,500 shares @ Rs 25 after arrears adjusted)	Dr Dr		17,12,500 37,500	17,50,000
Due	Amount due/receivable on final call
	Equity share first call account To Equity share capital account (Being- amount due/receivable on first call)	Dr		10,50,000	10,50,000
Received	Amount received on final call
	Bank account (b/f) Calls in arrears account To Equity share first call account (Being- amount received on 70,000 – 1,500 = 68,500 shares @ Rs 15 after arrears adjusted)	Dr Dr		10,27,500 22,500	10,50,000

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 27 [pro rata over subscription and calls in arrears]

RK Company Ltd issued 70,000 equity shares of $/₹/Rs 100 each at 10% premium. The amount payable as under:

On application Rs 30; on allotment Rs 35; on first Rs 25; on final call Rs 20 not yet called

The company received applications for 100,000 shares. The BOD decided to allotment in following basis:

Applications for 50,000 shares Pro-rata

Applications for 40,000 shares full

Applications for 10,000 shares Nil

Required: Journal entries

[Answer: Arrears on allotment = Rs 15,000; Allotment bank = Rs 18,35,000;

Arrears on final call = Rs 37,500]

SOLUTION:

Shares

Issued

Price

Installation

Arrears and

Advance

Share

Applied

Shares

Allotted

70,000

100 + 10P

Application

Allotment

First call

Final call not called

35 (25C+10P)

−1,000

−1,000−500

50,000

40,000

10,000

30,000^A

40,000

Nil

100,000

70,000

Return or refunded money

= Rejected or Nil shares × Always application amount

= 10,000 shares × Rs 30

= Rs 300,000^#

Excess money

= Difference in pro-rata shares × Always application money

= (50,000 – 30,000 shares) × Rs 30

= 20,000 × Rs 30

= Rs 600,000*

When there is a call in arrears on allotment, this formula can be applied:

Amount need on allotment (70,000 shares @ Rs 35)

Less: Excess amount of pro-rata

24,50,000

(600,000*)

Arrears seem on allotment (1,000 Shears @ Rs 35)

Less: Paid = (Rs 600,000* × 1,000 shares) ÷ 30,000^A

35,000

(20,000)

18,50,000

(15,000)

Received amount on allotment (bank)

18,35,000

Where: Paid = (Excess amount × Arrears shares) ÷ Pro-rata allotted shares

Calls in arrears on first call = (1,000+500) shares × Rs 25 final call money = Rs 37,500

Alternatively,

Excess amount per share = Excess amount ÷ Pro-rata allotted = Rs 600,000 ÷ 30,000 shares = Rs 20

Calls in arrears per share = Allotment amount ‒ Excess amount per share = Rs 35 ‒ Rs 20 = Rs 15

Calls in arrears on allotment = 1,000 shares × Rs 15 = Rs 15,000

Journal Entries

In the book of RK Company Ltd

Date	Particulars		LF	Amount	Amount
Received	Amount received on application
	Bank account To Equity share application account (Being- amount received on 100,000 shares @ Rs 30)	Dr		30,00,000	30,00,000
Transfer	Amount transfer of application
	Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted)	Dr		30,00,000	21,00,000 3,00,000* 6,00,000^#
Due	Amount due/receivable on allotment
	Equity share allotment account To Equity share capital account To Share premium (security premium) (Being- amount due on allotment and premium adjusted)	Dr		24,50,000	17,50,000 7,00,000
Received	Amount received on allotment
	Bank account Calls in arrears account To Equity share allotment account (Being- amount received from working note)	Dr Dr		18,35,000 15,000	18,50,000
Due	Amount due/receivable on first call
	Equity share first call account To Equity share capital account (Being- amount due/receivable on first call)	Dr		17,50,000	17,50,000
Received	Amount received on first call
	Bank account (b/f) Calls in arrears account To Equity share first call account (Being- amount received on 70,000 – 1,000 − 500 = 68,500 shares @ Rs 25, after arrears adjusted)	Dr Dr		17,12,500 37,500	17,50,000

Note: second and final call has not yet called. Therefore, no entry.

***********

PROBLEMS AND ANSWERS

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Basic Problem: 22 [pro rata over subscription and calls in arrears]

HCL Company Ltd issued 80,000 equity shares of Rs 100 each. The amount payable as under:

On application Rs 25

On allotment Rs 40

On first and final call Rs 35

The company received applications for 100,000 shares. Applicants for 10,000 shares were rejected. Applicants for 50,000 shares were allotted full and remaining shares were allotted on pro-rata basis. The BOD has authority to utilize excess money toward allotment. All the shares were issued. All the amounts were received except a shareholder holding 1,000 shares under pro-rata failed to pay call money.

Required: Journal entries

[Answer: Return amount = Rs 250,000; Excess amount = Rs 250,000;

Amount received on allotment = Rs 29,50,000; Arrears on calls = Rs 35,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Basic Problem: 23 [pro rata over subscription and calls in arrears]

Utsav Company Ltd issued 50,000 equity shares of Rs 100 each. The amount payable as under:

On application Rs 30

On allotment Rs 45

On first and final call Rs 25

The company received applications for 90,000 shares. Applicants for 10,000 shares were rejected. Applicants for 30,000 shares were allotted full and remaining shares were allotted on pro-rata basis. The BOD has authority to utilize excess money toward allotment. The entire shares were issued. All the amounts were received. A shareholder holding 1,000 shares under pro-rata basis paid entire amount with allotment.

Required: Journal entries

[Answer: Return amount = Rs 300,000; Excess amount = Rs 900,000;

Amount received on allotment = Rs 13,50,000; Advance for calls = Rs 25,000

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Basic Problem: 24 [pro rata over subscription and calls in arrears]

Nepal Tea Company Ltd has authorized capital $/₹/Rs 50,00,000 divided into shares of Rs 100 each. The Company issued 30,000 equity shares at par. The amount payable as under:

Rs 20 on application; Rs 50 on allotment; Rs 30 on first and final call

The Company received applications for 60,000 shares. The BOD decided to allotment in following basis:

Applications for 15,000 shares Pro-rata

Applications for 20,000 shares full

Applications for 25,000 shares Nil

Excess money can be utilizes toward allotment. The entire amount was duly received except a shareholder who held 800 shares under pro-rata basis failed to pay allotment and calls.

Required: Journal entries

[Answer: Arrears on allotment = Rs 32,000; Allotment bank = Rs 13,68,000;

Arrears on final call = Rs 24,000;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Basic Problem: 25 [pro rata over subscription and calls in arrears]

BK Company Ltd issued 70,000 equity shares of $/₹/Rs 100 each at 10% premium. The amount payable as under:

Rs 30 on application; Rs 50 on allotment (including premium); Rs 30 on first and final call

The Company received applications for 100,000 shares. The BOD decided to allotment in following basis:

Applications for 50,000 shares Pro-rata

Applications for 40,000 shares full

Applications for 10,000 shares Nil

Required: Journal entries