Arrange the journal entries with regard to first call of shares in the correct sequence:
(A) For Adjustment of Excess Application Money
(B) For Amount Due on Allotment
(C) For Allotment money received.
(D) For Amount Due on call.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B), (C), (D)
When more money is received on applications than is needed (pro-rata allotment), the entries follow the money from application to the first call.
(A) For Adjustment of Excess Application Money — when the application money is transferred to Share Capital, the excess received on the shares applied for is credited to Share Allotment Account in the same entry, ready to be set off against allotment.
(B) For Amount Due on Allotment — Share Allotment A/c is debited and Share Capital A/c credited with the full allotment money due.
(C) For Allotment money received. — Bank is debited with the allotment money less the excess already adjusted, which is why the adjustment and the amount due come first.
(D) For Amount Due on call. — only after allotment is the first call made: Share First Call A/c Dr. To Share Capital A/c.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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