question_answer

ABC Ltd invited applications for 4,000 debentures of Rs. 100 each issued at a premium of 20%. Applications were received for 6,000 debentures and it was decided to deal with the same as follows:

(i) To refuse allotment to applicants for 1,200 debentures.

(ii) To give full allotment to applicants for 400 debentures.

(iii) To allot the remaining debentures on pro-rata basis among other applicants.

(iv) To utilise excess application money in part payment of allotment money.

Journalise the above transactions (including cash transactions) assuming that (a) the full amount is payable along with the applications. Also identify the value being violated by the company.

Answer:

                                                            JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Bank A/c \[\left( 6,000\times 120 \right)\]	Dr		7,20,000
	To Debenture Application and Allotment A/c				7,20,000
	(Being the application money received)
	Debenture Application and Allotment A/c	Dr		7,20,000
	To Debentures A/c \[\left( 4,000\times 100 \right)\]				4,00,000
	To Securities Premium Reserve A/c \[\left( 4,000\times 20 \right)\]				80,000
	To Bank A/c \[\left( 2,000\times 120 \right)\]				2,40,000
	(Being the application money adjusted and surplus refunded)

The value being violated by the company is equality.