shares had forwarded RM20,000 in full payment of the shares. On 15 September, the directors proceeded to allot 300,000 ordinary shares on the following basis. Applicants for 30,000 shares were refunded their application money in

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 5

Sedunia Berhad was incorporated on 1 July 2020. On 1 August, it decided to issue 300,000 ordinary shares on the following terms:

Application RM1 per share

Allotment RM2 per share

Call as required RM1 per share

To the end of August, applications for 350,000 shares had been received together with the application money due on each share. One applicant for 5,000 shares had forwarded RM20,000 in full payment of the shares.

On 15 September, the directors proceeded to allot 300,000 ordinary shares on the following basis. Applicants for 30,000 shares were refunded their application money in full, 5,000 shares were allotted to the applicant who paid for the shares in full, and the other successful applicants were allotted the remaining shares, excess application money being transferred to allotment.

On 7 October, all allotment money had been received.

A first and final call was made on 1 November, and all call money was received by 30 November with the exception of the amount due on 6,000 shares.

Required:

(b) Explain what is meant by oversubscription and the measures that a company can take under this situation.

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