CA Foundation · Accounting · Company Accounts
Verma Ltd. issued 5,000 equity shares of ₹10 each at a premium of ₹2 per share. Application money was ₹4 per share, allotment ₹5 per share (including premium) and the balance on call. Applications were received for 8,000 shares and allotment was made pro rata to all applicants. What amount of excess application money is available to be adjusted towards allotment?
Application money received is 8,000 × ₹4 = ₹32,000, while the 5,000 shares allotted need only ₹20,000. The excess ₹12,000 is adjusted against the allotment money due or refunded.
- A₹12,000Correct
- B₹16,000
- C₹20,000
- D₹32,000
Explanation
Application money received = 8,000 × 4 = ₹32,000. Application money required on the 5,000 shares allotted = 5,000 × 4 = ₹20,000. Excess = 32,000 - 20,000 = ₹12,000, which is adjusted towards allotment.
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