Issue Of Shares

Step 1: Logical order of share issue. 1. Company first issues prospectus → (A). 2. Investors apply with application money → (C). 3. Company ensures minimum subscription within 120 days → (B). 4. Letters of allotment/regret are sent → (D).

Step 2: Arrange accordingly. (A) → first, (C) → second, (B) → third, (D) → last.

Final Answer:

Step 1: Determine number of shares applied.
Applications received = 70,000 shares.
Application money = Rs. 5 per share (including premium).

Step 2: Calculate total application money received.
.

Step 3: Adjustments.
Out of Rs. 3,50,000, Rs. 40,000 was refunded and Rs. 60,000 adjusted later towards allotment. But the credit to Equity Share Application Account at the time of receipt is the total application money received, i.e., Rs. 3,50,000.

Final Answer:

Step 1: Meaning of minimum subscription.
Minimum subscription is the minimum amount required by law to be collected before a company can allot shares.

Step 2: Utilization.
It must cover: - Price of property purchased or to be purchased
- Preliminary expenses and commission on issue
- Working capital
- Other necessary expenditure for usual conduct of business

Step 3: Conclusion.
Hence, all four (A), (B), (C), and (D) are correct.

Final Answer:

Step 1: Applications received.
Shares applied = 70,000.
Shares issued = 50,000.
Therefore, excess applications = 20,000 shares.

Step 2: Application money per share.
Application = Rs. 5 (including premium).

Step 3: Excess money received.
Excess application = .

Step 4: Adjustment of excess.
As per the passage, Rs. 40,000 was refunded and Rs. 60,000 was adjusted towards allotment. Thus, in totality, the amount of excess application money accounted for = Rs. 1,00,000.

Final Answer:

To understand the correct sequence of accounting events for share capital, let's analyze each step:

1. Issue of prospectus (C): The company first issues a prospectus to the public. This document provides details about the company, its financials, and the terms of the share issue to attract potential investors.
2. Receive application money (A): After the prospectus is issued, interested investors submit applications along with the application money for the shares.
3. Allotment of share (E): Once the applications are reviewed, the company allots shares to the applicants. This is an official confirmation of share ownership to the investors.
4. Calls in advance (B): This step involves the collection of any not-yet-due calls from shareholders who wish to pay in advance. However, this isn't a mandatory step but follows after allotment.
5. Final call of share (D): The final call is made to collect the remaining amount due on the shares from the shareholders.

Based on these steps, the correct sequence is: C, A, E, B, D.