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Prorata allotment

Jagjeet Kaur (Student) (32 Points)

27 August 2016

I want to know about the adjustment of excess of application money in the case of oversubscripttion.

where is excess amount of application adjusted first- in allotment or in premium?

Like, Rs.100 are in excess of application money. Amount required for allotment is Rs.250( including Rs.50 premium). Will it be right to say that premium is received?

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3 Replies

Manjunath Rampure S (Student) (96 Points)
Replied 27 August 2016

Face values is credited to Application money received account and premium to Share premium account

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Jagjeet Kaur (Student) (32 Points)
Replied 27 August 2016

thanks for your reply.
I am asking where is excess adjusted first-in allotment money or in premium?
If the shares are forfeited in the above example, will premium a/c be debited?

Manjunath Rampure S (Student) (96 Points)
Replied 28 August 2016

Excess of application money received will be kept in Share application money pending allotment account till the due entries are passed for Application money and Premium amount to be received.

After you pass those entries, you'll allocate the amount to both the accounts.

Unsure about which account has to be credited first. I suggest taking this question to experts section. Am following the post. Please comment here if you get an answer.

Thank you