H Ltd issued a prospectus inviting applications for 20,000 shares of Rs 10 each at a premium of Rs - Accountancy - Accounting for Share Capital

Question

H Ltd issued a prospectus inviting applications for 20,000
shares of Rs 10 each at a premium of
Rs 2 per share payable as follows:On application Rs 2On allotment
Rs 5 ( including premium) On First Call Rs 3On Second and Final
Call the balance Applications were received for 30,000 shares and
prorate allotment was made on theapplications for 24,000 shares
Money overpaid on applications was employed on account ofsum due on
allotment Ramesh, to whom 400 shares were allotted, failed to pay
the allotment money and on hissubsequent failure to pay the first
call his shares were forfeited Mohan, holder of 600 shares,failed
to pay the two calls and his shares were forfeited after the second
call All the forfeitedshares were sold to Krishna credited as fully
paid for Rs 9 per share Show the journal entriesin the books of the
company

Manisha Arora · Accepted Answer

Journal
Entry

Date

Particulars
L F
Debit Amount
Rs
Credit Amount
Rs

Bank A/c
Dr

60,000

To Share Application A/c

60,000

(Share Application received for 30,000
shares @ Rs 2 each)

Share Application A/c
Dr

60,000

To Share Capital A/c

40,000

To Share Allotment A/c

8,000

To Bank A/c

12,000

(Share Application money transferred to
Share Capital A/c)

Share Allotment A/c
Dr

1,00,000

To Share Capital A/c

60,000

To Securities Premium A/c

40,000

(Share Allotment is due for 20,000 shares
of Rs 5 each (including Premium of Rs 3 per share)

Bank A/c
Dr

90,160

To Share Allotment A/c

90,160

(Share allotment received except on 400
shares)

Share First Call A/c
Dr

60,000

To Share Capital A/c

60,000

(Share First Call is due for 20,000
shares of Rs 3 each)

Bank A/c
Dr

37,000

To Share First Call A/c

37,000

(Share First Call received except for
1,000 shares)

Share Capital A/c
Dr

3,200

Securities Premium A/c
Dr

800

To Share Forfeiture A/c

960

To Share Allotment A/c

1,840

To Share First Call A/c

1,200

(400 shares of Rs 10 each were forfeited
for non-payment of allotment and first call, issued at premium of
Rs 2 each, final call yet not made)

Share Second and Final A/c
Dr

39,200

To Share Capital A/c

39,200

(Share Second and Final Call is due for
19,600 shares of Rs 2 each)

Bank A/c
Dr

38,000

To Share Second and Final Call A/c

38,000

(Share Second and Final Call received for
19,000 share of Rs 2 each)

Share Capital A/c
Dr

6,000

To Share Forfeiture A/c

3,000

To Share First Call A/c

1,800

To Share Second and Final Call A/c

1,200

(600 shares of Rs 10 each were forfeited
for non payment of Share First and Second and Final Call)

Bank A/c
Dr

9,000

Share Forfeiture A/c
Dr

1,000

To Share Capital A/c

10,000

(Forfeited shares were re-issued for Rs 9
each fully paid-up)

Share Forfeiture A/c
Dr

2,960

To Capital Reserve

2,960

(Profit on Forfeiture of Shares is
transferred to Capital Reserve)

Working Notes:
Share Application received for 24,000 shares of Rs 2 each = Rs
48,000
Share Allotted (24,000 shares of Rs 2 each) = Rs 40,000
Excess Application money received = Rs 8,000 (Rs 40,000-Rs
48,000)

Share Allotment is due for 20,000 shares of Rs 5 each = Rs
1,00,000
Excess Application adjusted = Rs 8,000
Amount to be received on Share Allotment = Rs 92,000 (Rs
1,00,000-Rs 8,000)

20,000 shares were allotted to those, who applied for = 24,000
shares
400 shares â€‹were allotted to those, who
applied for = 400/20,000*24,000 = 480

Share Application received for 480 shares of Rs 2 each = Rs 960
Share Alloted (400 shares of Rs 2 each) = Rs 800
Excess Application money received = Rs 160 (Rs 960-Rs
800)

Share Allotment is due for 400 shares of Rs 5 each = Rs 2,000
Excess Application adjusted = Rs 160
Amount to be received on Share Allotment = Rs 1,840 (Rs
2,000-Rs 160)

Therefore, anount recived on Share Allotment = Rs 90,160 (Rs
1,00,000-8,000-1,840)

	Journal Entry
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

		Bank A/c	Dr.		60,000
		To Share Application A/c				60,000
		(Share Application received for 30,000 shares @ Rs 2 each)

		Share Application A/c	Dr.		60,000
		To Share Capital A/c				40,000
		To Share Allotment A/c				8,000
		To Bank A/c				12,000
		(Share Application money transferred to Share Capital A/c)

		Share Allotment A/c	Dr.		1,00,000
		To Share Capital A/c				60,000
		To Securities Premium A/c				40,000
		(Share Allotment is due for 20,000 shares of Rs 5 each (including Premium of Rs 3 per share)

		Bank A/c	Dr.		90,160
		To Share Allotment A/c				90,160
		(Share allotment received except on 400 shares)

		Share First Call A/c	Dr.		60,000
		To Share Capital A/c				60,000
		(Share First Call is due for 20,000 shares of Rs 3 each)

		Bank A/c	Dr.		37,000
		To Share First Call A/c				37,000
		(Share First Call received except for 1,000 shares)

		Share Capital A/c	Dr.		3,200
		Securities Premium A/c	Dr.		800
		To Share Forfeiture A/c				960
		To Share Allotment A/c				1,840
		To Share First Call A/c				1,200
		(400 shares of Rs 10 each were forfeited for non-payment of allotment and first call, issued at premium of Rs 2 each, final call yet not made)

		Share Second and Final A/c	Dr.		39,200
		To Share Capital A/c				39,200
		(Share Second and Final Call is due for 19,600 shares of Rs 2 each)

		Bank A/c	Dr.		38,000
		To Share Second and Final Call A/c				38,000
		(Share Second and Final Call received for 19,000 share of Rs 2 each)

		Share Capital A/c	Dr.		6,000
		To Share Forfeiture A/c				3,000
		To Share First Call A/c				1,800
		To Share Second and Final Call A/c				1,200
		(600 shares of Rs 10 each were forfeited for non payment of Share First and Second and Final Call)

		Bank A/c	Dr.		9,000
		Share Forfeiture A/c	Dr.		1,000
		To Share Capital A/c				10,000
		(Forfeited shares were re-issued for Rs 9 each fully paid-up)

		Share Forfeiture A/c	Dr.		2,960
		To Capital Reserve				2,960
		(Profit on Forfeiture of Shares is transferred to Capital Reserve)