Eicher Ltd. issued 50,000 shares of ₹10 each at a premium of ₹5 per share, payable as follows: Applications were received for 72,000 shares. Directors allotted 50,000 shares to the applicants applying for 65,000 shares, with the remaining applications being refused. Money overpaid on application was utilized towards the sum due on allotment. All the money was duly received except for the first call from Rahul, who applied for 2,600 shares. Due to non-payment of the 1st call, his shares were forfeited immediately. Later on, these shares were re-issued at the minimum issue price. On the basis of the following case study, answer the questions.
Identify the ratio in which shares are issued on Pro-rata basis.
10:13
To determine the ratio in which shares are issued on a pro-rata basis, let's analyze the given details:
- Eicher Ltd. received applications for a total of 72,000 shares.
- The company had issued and allotted 50,000 shares. However, they received applications that totaled 72,000 shares.
- Allotment was done pro-rata to the applicants applying for 65,000 shares. This means that the total application for 65,000 shares had to be pro-rated to fit into the 50,000 shares available.
The pro-rata ratio can be calculated as the number of shares allotted to the number of shares applied for:
\(\text{Pro-rata ratio} = \frac{\text{Number of shares allotted}}{\text{Number of shares applied for}} = \frac{50,000}{65,000}\)
Now, simplify the fraction:
\(\begin{align*} \frac{50,000}{65,000} &= \frac{500}{650} \\ &= \frac{10}{13} \end{align*}\)
This shows that the shares are issued on a pro-rata basis in the ratio 10:13.
Thus, the correct answer is: 10:13.
Let's briefly justify why other options are incorrect:
- \(50:72\): This ratio does not represent the pro-rata allocation because 65,000 applications were prorated to 50,000 shares, not 72,000.
- \(72:50\): This is an inverse ratio that would indicate more shares were allotted than applied, which is incorrect.
- \(13:10\): This is simply the inverse of the correct answer.
Important Questions from Accounting for Share Capital
Nawab, Shanaya, and Hritik are partners sharing profits and losses in the ratio of 5 : 3 : 2. The partnership deed provides for charging interest on drawings @10% p.a. The drawings of Nawab, Shanaya, and Hritik were ₹20,000, ₹15,000, and ₹10,000, respectively. After final accounts have been prepared, it was discovered that interest on drawings had not been charged. The adjusting entry will be:
Mr. Kunal withdrew ₹10,000 per month at the end of each month from a firm for his personal use during the year ending March 31, 2022. What will be the interest on drawings if charged @8% p.a.?
What are the accounting aspects that are involved at the time of retirement or death of a partner?
(A) Ascertainment of profit or loss up to the date of retirement or death of partner.
(B) Realisation of assets and liabilities that are shown in the books of Accounts only.
(C) Adjustment of capital.
(D) Calculation of new profit sharing ratio and gaining ratio.
(E) Treatment of Goodwill
Choose the correct answer from the options given below:
On retirement of a partner, the retiring partner’s capital account will be credited with:
Which of the following are shown in Revaluation A/c?
(A) Unrecorded Asset
(B) Workmen Compensation Reserve
(C) Decrease in fixed Asset
(D) Increase in Inventory
(E) Drawings of partner
Choose the correct answer from the options given below:
