Hema Ltd invited applications for issung 30,000 equity shares of Rs 100 each at a premium of Rs 20 - Accountancy - Accounting for Share Capital

Question

Hema Ltd invited applications for issung 30,000 equity shares of
Rs 100 each at a premium of Rs 20 each The amount was payable as
follows:
(i) On application and allotment-Rs 40(including premium Rs 10)
per share
(ii) On first call-Rs 50(including premium Rs 10) per share
(iii) On second and final call-balance
Applications for 75,000 shares were received Applications for
15,000 shares were rejected and the money received from them was
refunded Shares were alloted on pro-rata basis to the remianing
applicants All calls were made "A" who had applied for 2,000 shares
failed to pay the first call and second and final call on the
shares alloted to him "B" who was alloted 1,000 shares failed to
pay the second and final call The shares of both "A" and "B" were
forfeited The forfeited shares were re-issued at Rs 160 fully
paid
Pass the necessary journal entries in the books of the company
for the above transactions

Manisha Arora · Accepted Answer

Journal
Entry

Date

Particulars
L F
Debit Amount
Rs
Credit Amount
Rs

Bank A/c
Dr

30,00,000

To Share Application A/c

30,00,000

(Share Application received on 75,000
shares of Rs 40 each including premium of Rs 10 each)

Share Application A/c
Dr

30,00,000

To Share Capital A/c

12,00,000

To Share First Call A/c

12,00,000

To Bank A/c

6,00,000

(Share Application transferred to Share
Capital A/c)

Share First Call A/c
Dr

15,00,000

To Share Capital A/c

12,00,000

To Securities Premium A/c

3,00,000

(Share First Call is due on 30,000 shares
of Rs 50 each including premium of Rs 10 each)

Bank A/c
Dr

2,80,000

To Share First Call A/c

2,80,000

(Share Application received on 28,000
shares @ Rs 50 each including premium of Rs 10 each))

Share Second and final Call A/c
Dr

9,00,000

To Share Capital A/c

9,00,000

(Share Second and Final Call is due on
30,000 shares of Rs 30 each)

Bank A/c
Dr

8,10,000

To Share Second and Final Call A/c

8,10,000

(Share Second and Final Call received on
27,000 shares of Rs 30 each)

Share Capital A/c
Dr

3,00,000

Securities Premium A/c
Dr

20,000

To Share forfeiture A/c

2,10,000

To Share First Call A/c

20,000

To Share Second and Final Call A/c

90,000

(3,000 shares were forfeited for
non-payment of Share First Call and Second and Final Call)

Bank A/c
Dr

4,80,000

To Share Forfeiture A/c

3,00,000

To Securities Premium A/c

1,80,000

(3,000 shares forfeited shares were
re-issued @ Rs 160 each)

Share Forfeiture A/c
Dr

2,10,000

To Capital Reserve

2,10,000

(Profit on forfeiture of Shares has been
transferred to Capital Reserve)

Working Notes:

Shares Applied
Shares
Allotted

15,000
Nil

60,000
30,000

75,000
30,000

Share Application and Allotment received on 75,000 shares of Rs 40
each (including Premium of Rs 10 each) = Rs 30,00,000
Application and allotemnt money refunded (15,000*40) = Rs
6,00,000
Share Allotted (30,000*40) = Rs 12,00,000
Excess Application and Allotment money adjusted = Rs 12,00,000
(Rs 30,00,000-Rs 6,00,000-Rs 12,00,000)

Share First Call is due on 30,000 shares of Rs 50 each (including
Premium of Rs 10 each = Rs 15,00,000
Excess Application and Allotemnt money to be adjusted = Rs
12,00,000
First Call has not been received = Rs 3,00,000 (Rs 15,00,000-Rs
12,00,000)

30,000 shares were allotted, who applied = 60,000 Shares
2,000 shares were allotted, who applied = 2,000/30,000*60,000 =
4,000 Shares

Share Application and Allotment money received on 4,000 shares of
Rs 40 each (including premium of Rs 10 each) = Rs 1,60,000
Share Allotted (2,000*40) = Rs 80,000
Excess Application and Allotment money received = Rs 80,000 (Rs
1,60,000-Rs 80,000)

Share First Call is due on 2,000 shares of Rs 50 each = Rs
1,00,000
Excess Application and Allotment Adjusted = Rs 80,000
Share First Call not received = Rs 20,000 (Rs 1,00,000-Rs
80,000)

Share First Call received = Rs Rs 2,80,000 (Rs
3,00,000-Rs20,000)

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

		Bank A/c	Dr.		30,00,000
		To Share Application A/c				30,00,000
		(Share Application received on 75,000 shares of Rs 40 each including premium of Rs 10 each)

		Share Application A/c	Dr.		30,00,000
		To Share Capital A/c				12,00,000
		To Share First Call A/c				12,00,000
		To Bank A/c				6,00,000
		(Share Application transferred to Share Capital A/c)

		Share First Call A/c	Dr.		15,00,000
		To Share Capital A/c				12,00,000
		To Securities Premium A/c				3,00,000
		(Share First Call is due on 30,000 shares of Rs 50 each including premium of Rs 10 each)

		Bank A/c	Dr.		2,80,000
		To Share First Call A/c				2,80,000
		(Share Application received on 28,000 shares @ Rs 50 each including premium of Rs 10 each))

		Share Second and final Call A/c	Dr.		9,00,000
		To Share Capital A/c				9,00,000
		(Share Second and Final Call is due on 30,000 shares of Rs 30 each)

		Bank A/c	Dr.		8,10,000
		To Share Second and Final Call A/c				8,10,000
		(Share Second and Final Call received on 27,000 shares of Rs 30 each)

		Share Capital A/c	Dr.		3,00,000
		Securities Premium A/c	Dr.		20,000
		To Share forfeiture A/c				2,10,000
		To Share First Call A/c				20,000
		To Share Second and Final Call A/c				90,000
		(3,000 shares were forfeited for non-payment of Share First Call and Second and Final Call)

		Bank A/c	Dr.		4,80,000
		To Share Forfeiture A/c				3,00,000
		To Securities Premium A/c				1,80,000
		(3,000 shares forfeited shares were re-issued @ Rs 160 each)

		Share Forfeiture A/c	Dr.		2,10,000
		To Capital Reserve				2,10,000
		(Profit on forfeiture of Shares has been transferred to Capital Reserve)

*Shares Applied*	*Shares Allotted*
15,000	Nil
60,000	30,000
75,000	30,000