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The Money Market
The money market is a good place for individuals, banks, other companies, and governments to park cash for a short period of time, usually one year or less. It exists so that businesses and governments that need cash to operate can get it quickly at a reasonable cost, and so that businesses that have more cash than they need can put it to use.
Primary Market
The primary market refers to the market where securities are created, while the secondary market is one in which they are traded among investors. Various types of issues made by the corporation are a Public issue, Offer for Sale, Right Issue, Bonus Issue, Issue of IDR, etc. The company that brings the IPO is known as the issuer, and the process is regarded as a public issue. The process includes many investment banks and underwriters through which the shares, debentures and bonds can directly be sold to the investors.
For example, company XYZ Inc. hires four underwriting firms to determine the financial details of its IPO. The underwriters detail that the issue price of the stock will be $20. Investors can then buy the IPO at this price directly from the issuing company. This is the first opportunity that investors have to contribute capital to a company through the purchase of its stock. A company’s equity capital is comprised of the funds generated by the sale of stock on the primary market.
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Faraday First Law of Electrolysis
It is one of the primary laws of electrolysis. It states, during electrolysis, the amount of chemical reaction which occurs at any electrode under the influence of electrical energy is proportional to the quantity of electricity passed through the electrolyte.
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JOURNAL
<th scope="col">|
i |
Bank A/c (1,20,000 {tex}\times{/tex} 20) Dr. |
. |
24,00,000 |
. |
| . | To Equity Share Application A/c | . | . | 24,00,000 |
| . | (Being application money received.) | . | . | . |
| ii | Equity Share Application A/c (1,20,000 {tex}\times{/tex} 20) Dr. | 24,00,000 | . | |
| . | To Equity Share Capital A/c (80,000 {tex}\times{/tex} 20) | . | . | 16,00,000 |
| To Equity Share Allotment A/c (40,000 {tex}\times{/tex} 20) | . | 8,00,000 | ||
| . | (Being application money transferred.) | . | . | . |
| iii | Equity Share Allotment A/c (80,000 {tex}\times{/tex} 60) Dr. | 48,00,000 | . | |
| . | To Equity Share Capital A/c (80,000 {tex}\times{/tex} 40) | . | . | 32,00,000 |
| . | To Securities Premium Reserve A/c (80,000 {tex}\times{/tex} 20) | . | . | 16,00,000 |
| . | (Being allotment money due.) | . | . | . |
| iv | Bank A/c (48,00,000 - 8,00,000 - 2,00,000) Dr. | 38,00,000 | . | |
| . | To Equity Share Allotment A/c | . | . | 38,00,000 |
| . | (Being allotment money received.) | . | . | . |
| v | Equity Share First and Final Call A/c Dr. | 32,00,000 | . | |
| . | To Equity Share Capital A/c (80,000 {tex}\times{/tex} 40) | . | . | 32,00,000 |
| . | (Being first and final call money due.) | . | . | . |
| vi | Bank A/c [80,000-4,000-800) {tex}\times{/tex} 40] Dr. | 30,08,000 | . | |
| . | To Equity Share First and Final Call A/c | . | . | 30,08,000 |
| . | (Being first and final call money received.) | . | . | . |
| vii | Equity Share Capital A/c (4,800 {tex}\times{/tex} 100) Dr. | . | 4,80,000 | . |
| . | Securities Premium Reserve A/c (4,000 {tex}\times{/tex} 20) Dr. | . | 80,000 | . |
| . | To Share Forfeiture A/c (6,000 {tex}\times{/tex} 20) + (800 {tex}\times{/tex} 60) | . | . | 1,68,000 |
| . | To Equity Share Allotment A/c | . | . | 2.00.000 |
| . | To Equity Share First and Final Call A/c (4,800 {tex}\times{/tex} 40) | . | . | 1.92.000 |
| . | (Being shares forfeited for non-payment.) | . | . | . |
| viii | Bank A/c (4,200 {tex}\times{/tex} 100) Dr. | . | 4,20,000 | . |
| . | To Equity Share Capital A/c | . | . | 4,20,000 |
| (Being shares reissued @ Rs. 100 per shares.) | . | . | . | |
| ix | Share Forfeiture A/c | . | 1,50,000 | . |
| . | To Capital Reserve A/c | . | . | 1,50,000 |
| . | (Being share forfeiture to capital reserve account.) | . | . |
Working Note
Calculation of allotment money not paid by Sitaram
Number of shares allotted to Sitaram {tex}= \frac { 80,000 } { 1,20,000 } \times 6,000 = 4,000{/tex} shares
| Money not paid on allotment | Amt (Rs.) |
| Money paid on application (6,000 {tex}\times{/tex} 20) | 1,20,000 |
| (-) Amount adjusted on allotment (4,000 {tex}\times{/tex} 20) | (80,000) |
| Excess application money adjusted on allotment | 40,000 |
| Money due on allotment (4,000 {tex}\times{/tex} 60) | 2,40,000 |
| (-) Excess application money adjusted | (40,000) |
| Money not paid on allotment by Sitaram | 2,00,000 |
Money received on allotment
| Total amount due on allotment (80,000 {tex}\times{/tex} 60) | 48,00,000 |
| (-) Excess application money adjusted | (8,00,000) |
| . | 40,00,000 |
| (-) Money not received from Sitaram on allotment | (2,00,000) |
| . | 38,00,000 |
| Amount forfeited on Sitaram 3,400 shares {tex}= 1,20,000 \times \frac { 3,400 } { 4,000 }{/tex} | 1,02,000 |
| Amount forfeited on Hamam’s 800 shares | 48,000 |
| . | 1,50,000 |
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