Atlantic ltd. Invited applications for issuing 2,40,000 equity shares of rs 10 each at a premium of rs 6 per share. The amount was payable as follows:
On application rs 4 per share( including premium rs 1 per share)
On allotment rs 6 per share( including premium rs 3 per share)
On first and final call- Balance.
Application for 4,80,000 shares were received. Applications for 1,20,000 shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sum due on allotment. Mohit holding 1,200 shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the final call was made. Shastri who had applied for 1,800 shares failed to pay the final call. These shares were also forfeited. Out of the forfeited shares 1,500 shares were re-issued at rs 8 per share fully paid up. The re-issued shares included all the forfeited shares of mohit.
Pass necessary journal entries for the above transactions in the books of Atlantic Ltd.
Dear Student
Calculation of Capital Reserve
i) 1200 shares of Mohit reissued
ii) 300 shares of Shastri reissued
Total Capital reserve = 3600+1200 = 4800
Regards
| JOURNAL | ||||
|---|---|---|---|---|
| Particulars | L.F. | Debit | Credit | |
| Bank A/c (480000*4) | Dr. | 1920000 | ||
| To Equity Share Application A/c | 1920000 | |||
| Equity Share Application A/c | Dr. | 1920000 | ||
| To Equity Share Capital A/c | 720000 | |||
| To Security Premium A/c | 240000 | |||
| To Equity Share Allotment A/c | 480000 | |||
| To Bank A/c | 480000 | |||
| Equity Share Allotment A/c (240000*6) | Dr. | 1440000 | ||
| To Equity Share Capital A/c (240000*3) | 720000 | |||
| To Security Premium A/c | 720000 | |||
| Bank A/c | Dr. | 955,200 | ||
| To Equity Share Allotment A/c | 955,200 | |||
| Share capital A/c (1200*6) | Dr. | 7,200 | ||
| Securities Premium A/c | 3,600 | |||
| To Share Allotment A/c | 4800 | |||
| To Share Forfeited A/c | 6000 | |||
| Equity Share First & Final Call A/c (238800*6) | Dr. | 1432800 | ||
| To Equity Share Capital A/c | 955200 | |||
| To Security Premium A/c | 477600 | |||
| Bank A/c (1432800-7200) | Dr. | 1,425,600 | ||
| To Share First & Final Call A/c | 1,425,600 | |||
| Share capital A/c (1200*10) | Dr. | 12,000 | ||
| Securities Premium A/c | Dr. | 2,400 | ||
| To Share Final Call A/c | 7200 | |||
| To Share Forfeited A/c | 7200 | |||
| Bank A/c (1500*8) | Dr. | 12000 | ||
| Share Forfeited A/c | Dr. | 3,000 | ||
| To Share Capital A/c | 15000 | |||
| Shares Forfeited A/c | Dr. | 4800 | ||
| To Capital Reserve A/c | 4800 | |||
| Working Notes | ||
|---|---|---|
| Amt. receivable on allotment | 1440000 | |
| Less: | Amt already received on application | -480000 |
| Less: | Amount not received on 1200 shares | -4800 |
| [(600*4) -(1200*6)] | ||
| (Amount receivable - excess amount received on application)* | ||
| Amount actually received on allotment | 955200 | |
| Shares applied by Mohit = | 360000/240000*1200 | |
| 1800 | ||
| Shares Allotted to Shastri = | 240000/360000*1800 | |
| 1200 | ||
| Applied Shares | Issued Shares | Received on Application | Transferred to Share Capital | Excess | Allotment due | Refund |
|---|---|---|---|---|---|---|
| 120000 | NIL | 480000 | NIL | 480000 | - | 480000 |
| 360000 | 240000 | 1440000 | 960000 | 480000 | 480000 | - |
| 480000 | 240000 | 1920000 | 960000 | 960000 | 480000 | 480000 |
Calculation of Capital Reserve
i) 1200 shares of Mohit reissued
| Share Forfeiture | 6000 |
| Less: Used of Reissue | -2400 |
| Capital Reserve | 3600 |
ii) 300 shares of Shastri reissued
| Share Forfeiture | 1800 |
| Less: Used of Reissue | -600 |
| Capital Reserve | 1200 |
Total Capital reserve = 3600+1200 = 4800
Regards
