Pro-rata Allotment

Assertion (A): In case of shares issued on Pro-rata basis, excess money received at the time of application can be utilised till allotment only.

Reason (R): Company has to pay interest on calls in advance @12% p.a. for amount adjusted towards calls (if any). In the context of the above two statements, which of the following is correct?

To provide employment to the youth and to develop a backward area of Jharkhand which is near one of the coal mines, Thermal Power Energies Ltd. decided to set-up a Thermal Power Plant of 500 mega watt capacities. The company decided to issue 10,00,000 equity shares of Rs.10 each at a premium of 70% to finance the project.

Applications for 17,00,000 shares were received. Applications for 5, 00,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The whole of share money was payable on application.

Pass necessary journal entries for the above transactions in the books of the company and identify any two values which the company wants to convey to the society.

To provide employment to the youth and to develop the Naxal affected backward areas of Chhattisgarh. X Ltd. decided to set-up a power plant. For raising funds the company decided to issue 7, 50,000 equity shares of Rs.10 each at a premium of 50%. The whole amount was payable on application. Applications for 20,00,000 shares were received. Applications for 50,000 shares were rejected and shares were allotted to the remaining applicants on pro-rata basis.

Pass necessary journal entries for the above transactions in the books of the company and identify any two values which X Ltd. wants to propagate.

Joy Ltd. issued 1,00,000 equity shares of Rs 10 each. The amount was payable as follows:

On application - Rs 3 per share

On allotment - Rs 4 per share

On 1st and final call - balance

Applications for 95,000 shares were received and shares were allotted to all the applicants. Sonam to whom 500 shares were allotted failed to pay allotment money and Gautam paid his entire amount due including the amount due on first and final call on the 750 shares allotted to him along with allotment.

The amount received on allotment was

(a) Rs 3,80,000
(b) Rs 3,78,000
(c) Rs 3,80,250
(d) Rs 4,00,250

Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payable as follows:

On application - Rs 2 per share
On allotment - Rs 5 per share (including premium)
On first and final call - balance

Applications for 1,50,000 share were received. Shares were allotted to all the applicants on pro-rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who has applied for 3,000 shares failed to pay the amount due on an allotment and first and final call. Madhur who was allotted 2,400 shares failed to pay the first and final call. Shares of both Manu and Madhur were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.

'Subham Ltd.' invited applications for issuing 12,000 equity shares of Rs 10 each at a premium of Rs  3 per share. The amount was payable as follows:

On application and allotment - Rs 6 per share (Including Premium)
On the first call - Rs 4 per share
On second and final call - the balance

Applications for 18,000 shares were received and pro-rata allotment was made to all the applicants. Excess money received with applications was adjusted towards sums due on the first call. All calls were made and were duly received except the first call and second and final call on 120 shares allotted to Vibhu. His shares were forfeited. The forfeited shares were reissued at the maximum permissible discount as per the provisions of the Companies Act, 1956.

Pass necessary Journal Entries for the above transactions in the books of the company

Pass necessary journal entries in the books of Z Ltd. for the following transaction:

Z Ltd. invited applications for issuing 10,000, 9% debentures of ₹ 100 each at a premium of ₹ 10 per debenture. The full amount was payable on application. Applications were received for 15,000 debentures. Applications for 3,000 debentures were rejected and the applications money was refunded. Debentures were allotted to the remaining applicants on a pro-rata basis.