Moti Ltd invited applications for issuing 10,00,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payable as follows:
On application Rs 5(Including premium)
On Allotment Rs 4
On First and Final Call Rs 3
Applications for 15,00,000 shares were received. Applications for 3,00,000 shares were rejected and pro-rata allotment was made to the remaining applicants. Excess application money was utilized towards sums due on allotment. Giri who had applied for 24,000 shares failed to pay the allotment and call money. His shaares were forfeited. Out of the forfeited shares 10,000 shares were reissued for Rs 8 per share fuly paid up. Pass necessary journal entries in the books of Moti Ltd.
Books of Moti Ltd. Journal | ||||
Date | Particulars | Debit Amount (Rs) | Credit Amount (Rs) | |
| Bank A/c [15,00,000 x 5] | Dr. | 75,00,000 |
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| To Equity Share Application A/c |
| 75,00,000 | |
| (being Amount received on Application) |
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| Equity Share Application A/c | Dr. | 75,00,000 |
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| To Equity Share Capital A/c [10,00,000 x 3] |
| 30,00,000 | |
| To Securities Premium Reserve A/c [10,00,000 x 2] |
| 20,00,000 | |
| To Equity Share Allotment A/c [2,00,000 x 5] |
| 10,00,000 | |
| To Bank A/c [3,00,000 x 5] |
| 15,00,000 | |
| (being Application money adjusted) |
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| Equity Share Allotment A/c [10,00,000 x 4] | Dr. | 40,00,000 |
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| To Equity Share Capital A/c |
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| 40,00,000 |
| (being Allotment due on 10,00,000 share @ Rs 4 per share) |
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| Bank A/c | Dr. | 29,40,000 |
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| To Equity Share Allotment A/c |
| 29,40,000 | |
| (being amount received on allotment) |
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| Equity Share First and Final Call A/c [10,00,000 x 3] | Dr. | 30,00,000 |
|
| To equity Share Capital A/c |
| 30,00,000 | |
| (being First and Final Call due on 10,00,000 shares) |
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| Bank A/c [9,80,000 x 3] | Dr. | 29,40,000 |
|
| To Equity Share First and Final call A/c |
| 29,40,000 | |
| (being First and Final call amount received on 9,76,000 shares) |
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| Equity Share Capital A/c [20,000 shares × Rs 10 each] | Dr. | 2,00,000 |
|
| To Equity Share Forfeiture A/c |
| 80,000 | |
| To Equity Share Allotment A/c |
| 60,000 | |
| To Equity Share First and Final Call A/c [20,000 x 3] |
| 60,000 | |
| (being 20,000 shares of GIRI forfeited) |
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| Bank A/c [10,000 x 8] | Dr. | 80,000 |
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| Equity Share Forfeiture A/c [10,000 x 2] | Dr. | 20,000 |
|
| To Equity Share Capital A/c |
| 1,00,000 | |
| (10,000 Equity shares were re-issued at Rs 8 each fully paid-up) |
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| Equity Share Forfeiture A/c | Dr. | 20,000 |
|
| To Capital Reserve A/c |
| 20,000 | |
| (Capital profit on 10,000 forfeited Equity Shares) |
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Working Notes:
1.
Category | Applied | Allotted | Money Received on Application at Rs 5 each | Money adjusted on Application at Rs 5 each | Excess money adjusted on allotment at Rs 4 each |
Giri | 24,000 | 20,000 | 1,20,000 | 1,00,000 | 20,000 |
| 24,000 | 20,000 | 1,20,000 | 1,00,000 | 20,000 |
2. Calculation of number of shares alotted to GIRI
Number of shares applied = 24,000 shares
3. Calculation of Amount unpaid on Allotment by GIRI
1 | 2 | 3 | 4 | 5 | 6 | 7 |
Shares Applied | Shares Allotted | Amount Received Application at Rs 5 | Amount Utilised on Application at Rs 5 | Excess Amount received on Application | Amount due on Allotment at Rs 4 | Amount Unpaid on Allotment |
24,000 | 20,000 | 1,20,000 | 1,00,000 | 20,000 (1,20,000-1,00,000) | 80,000 | 60,000 (80,000 – 20,000) |
4. Calculation of Amount to be transferred to Capital Reserve
Particulars | Amount (Rs) |
Amount forfeited on all shares of Giri (20,000 shares) | 80,000 |
Amount forfeited on 50% shares of Giri (10,000 shares) (50% × 20,000) | 40,000 |
Total Amount forfeited on 10,000 shares | 40,000 |
Less: Shares Forfeited balance used at the time of reissue | (20,000) |
Amount to be transferred to Capital Reserve | 20,000 |
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