JAMB Accounts Principles of Accounts 2015 Paper

Concept:In an oversubscribed share issue, shares are distributed on a pro-rata basis using an allotment ratio.Explanation:The allotment ratio is the share of total applications that can be satisfied.Here, the available shares are $500,000$ against total applications of $1,250,000$.So, allotment ratio $= \frac{500,000}{1,250,000} = 0.4$, which is $40\%$.This means every applicant receives only $40\%$ of the units they applied for.The subscriber applied for $50,000$ units.Number of shares issued $= 50,000 \times 0.4 = 20,000$ units.Therefore, the subscriber will be allotted $20,000$ shares.Answer:A. 20,000