Multiple choice

ABC Ltd. issued 40,000 shares of Rs. 10 each to the public payable Rs. 2 on application, Rs. 4 on allotments and Rs. 4 on first call. Applications were received for 50,000 shares. Applications for 5,000 are rejected and application money is returned. Surplus of application money on 5,000 shares is utilized for allotment.

Which is the correct entry for the utilization of excess application money?

  1. Share Application A/c

    To Bank

  2. Share Allotment A/c To Share Capital A/c

  3. Share Application A/c To Share Allotment A/c

  4. Share Capital A/c To Share Application A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The excess money on application is utilized for allotment & Share Application A/c is debited while Share Allotment A/c is credited.

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