Question

Savory Ltd. had issued ₹ 1,00,000 shares of ₹ 10 each at par payable ₹ 4 on application and balance on allotment on 25th March, 2026.

It received ₹ 10,00,000 as application money.

Shares were allotted on 10th April, 2026.

How much amounts will be shown in the Balance Sheet as at 31st March, 2026 against

1. Shares Application Money Pending Allotment, and
2. Shares Application Money and under which main head and sub-head?

Give reason for showing it under the respective heads.

Answer 1

(a) Total Shares Issued = 1,00,000 shares

Application Money per Share = ₹ 4

Actual Application Money Needed/Allotable = 1,00,000 × ₹ 4

= ₹ 4,00,000

Heading: Shown as a separate Standalone Major Head on the Balance Sheet face.

Reason: This is the actual money required for the 1,00,000 shares to be issued. Since the company will allot these shares on 10th April 2026 (after the 31st March balance sheet date), it must be shown under this independent main heading until the actual allotment happens.

(b) Total Application Money Received = ₹ 10,00,000

Excess Application Money Received = ₹ 10,00,000 − ₹ 4,00,000

= ₹ 6,00,000

Heading: Main Head is Current Liabilities, Sub-head is Other Current Liabilities.

Reason: The company received ₹ 10,00,000 but only needed ₹ 4,00,000. The excess ₹ 6,00,000 is a surplus that must be refunded or adjusted within 12 months. Because it is a short-term financial obligation, it is classified as a current liability.