A company has ₹5,00,000 Authorised share capital and issued 5,500 shares @ Rs 10 each. Applications were received for 5,000 shares. How much amount will be debited in Bank A/c if full amount is called on application.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹50,000.
The entire amount of the shares is collected at the time of application.
Number of shares issued = 5,500
Face value per share = ₹10
Applications received = 5,000
Amount to be debited in the Bank A/c = Number of shares applied for * Face value per share Amount
= 5,000 X ₹10
= ₹50,000
Journal entry made for this-
Bank A/c Dr. ₹50,000
To Share application A/c ₹50,000
So, bank A/c is debited with ₹50,000.