X ltd. Invited applications for 11,000 shares of Rs 10 each issued at 20% premium payable as:

on application Rs 3 (including 1 rs premium)

on allotment Rs 4 (incuding 1rs. premium)

on 1st call Rs. 3 and on 2nd call Rs. 2

Applications were received for 24000 shares.

Category A : 1/4 th shares applied for alloted 2000 shares.

Category B : 3/4 th of the shares applied for alloted 9000 shares.

Remaining applicants were rejected. Mr mohan who was holding 300 shares out of category B failed to pay allotment money and two calls and his shares were forfeited. Later on his shares were reissued @ rs. 11 fully paid up. Pass the necessary journal entries.

 

 

 

 

a

b

c = a – b

d

e

f

Category

Applied

Allotted

Money

Received on application

at Rs 3 each

Application

Money transferred to Share Capital

at Rs 3 each

Excess

money on application

Allotment

Due

at Rs 4 each

Application money adjusted on allotment

Calls-in-Advance

(Excess money on application after adjusting the amount of allotment)

A

6,000

2,000

18,000

6,000

12,000

8,000

8,000

4,000

B

18,000

9,000

54,000

27,000

27,000

36,000

27,000

NIL

C

NIL

 

 

 

 

 

 

 

Total

24,000

11,000

72,000

33,000

 

44,000

35,000

4,000

 

 

Books of X Ltd.

Journal Entries

Date

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (24,000 shares × Rs 3 each)

Dr.

 

72,000

 

  To Equity Share Application A/c

 

 

 

72,000

(Share application money received for 24,000 shares at Rs 3 each)

 

 

 

 

 

 

Equity Share Application A/c

Dr.

72,000

 

  To Share Capital A/c (11,000 shares × Rs 2 each)

 

 

 

 

 

 

22,000

  To Securities Premium A/c (11,000 shares × Re 1 each)

 

11,000

  To Share Allotment A/c (see column e of the above table)

 

35,000

  To Calls-in-Advance A/c

 

4,000

(Share application money of 11,000 shares transferred to share capital, and securities premium. The balance amount adjusted on allotment and calls-in-advance)

 

 

 

 

 

 

Share Allotment A/c (11,000 shares × Rs 4 each)

Dr.

44,000

 

  To Securities Premium A/c(11,000 shares × Re 1 each)

 

 

 

 

11,000

  To Share Capital A/c (11,000 shares × Rs 3 each)

 

33,000

(Share allotment due on 11,000 shares at Rs 4 per each including Re 1)

 

 

 

 

 

 

Bank A/c  (see WN2)

Dr.

8,700

 

Calls-in-Arrears A/c

Dr.

300

 

  To Share Allotment A/c

 

 

9,000

(Share allotment money received after adjustment of excess application money)

 

 

 

 

 

 

 

Share First A/c

Dr.

33,000

 

  To Share Capital A/c (11,000 shares × Rs 3 each)

 

 

33,000

(Share first call due on 11,000 shares at Rs 3 each)

 

 

 

 

 

 

 

Bank A/c (see WN3)

Dr.

28,100

 

Calls-in-Arrears A/c (300 shares × Rs 3 each)

Dr.

900

 

Calls-in-Advance A/c

Dr.

4,000

 

  To Share First and Final Call A/c

 

 

33,000

(Share first and final call received and calls in advance adjusted)

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

22,000

 

  To Share Capital A/c

 

 

22,000

(Share final call due on 11,000 shares at Rs 2 each)

 

 

 

 

 

 

 

Bank A/c (see WN4)

Dr.

21,400

 

Calls-in-Arrears A/c (300 shares × Rs 2 each)

Dr.

6,00

 

  To Share Final Call A/c

 

 

22,000

(Share final call received on all share except 300 shares)

 

 

 

 

 

 

 

Share Capital A/c (300 shares × Rs 10 each)

Dr.

3,000

 

Securities Premium A/c  (300 shares × Rs 1 each)

Dr.

300

 

  To Share Forfeiture A/c (see WN5)

 

 

1,500

  To Call-in-Arrears A/c

 

 

1,800

(300 shares forfeited on account non-payment allotment and calls)

 

 

 

 

 

 

 

Bank A/c (300 shares × Rs 11 each)

Dr.

3,300

 

  To Share Capital A/c  (300 shares × Rs 10 each)

 

 

3,000

  To Securities Premium A/c (300 shares × Re 1 each)

 

 

300

(300 shares of Rs 10 each reissued at Rs 11 per share fully paid-up)

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

1,500

 

  To Capital Reserve A/c (see WN5)

 

 

1,500

(Balance of Share Forfeiture Account transferred to Capital Reserve Account)

 

 

 

 

 

 

 

 

 

 

Working Notes

WN1

Number shares hold (applied) by Mr. Mohan = 300

Number of Share applied by Mr. Mohan =  = 600 Shares

Money received on application 600 Shares × Rs 3

=

Rs 1,800

Less: Money transferred to Share Capital 300 Shares × Rs 2

=

Rs 600

Less: Money transferred to Securities Premium 300 Shares × Re 1

=

Rs 300

Excess money on application from Mr. Mohan

 

900

 

Allotment due 300 Share × Rs 4 (including Re 1 premium)

=

1,200

Less: Excess on money application

=

900

Calls-in-Arrears on Allotment

 

300

 

WN2

Share Allotment

Share Allotment due 11,000 Share × Rs 4

=

44,000

Less: application money adjusted on application

=

(35,000)

Less: Calls-in-Arrears on shares of Mr. Mohan

 

(300)

Money received on allotment

 

8,700

 

WN3

Share First Call

Share First Call due 11,000 × Rs 3

=

33,000

Less: Adjustment of Calls-in-Advance  

=

4,000

Less: Calls-in-Arrears on Mr. Mohan Shares 300 × 3

=

900

Amount received on Share First Call

 

28,100

 

 

 

WN4

Share Final Call

Share Final Call due 11,000 Shares × Rs 2

=

22,000

Less: Calls-in-Arrears on Mr. Mohan’s Shares 300 × Rs 2

=

600

Money received on first call

 

21,400

WN5

Capital Reserve

Money received on Mr. Mohan’s shares

=

1,800

  (Money received on application)

 

 

Less: Money credited to securities premium 300 shares × Re 1

=

(300)

Share Forfeiture Credit

=

1,500

Share Forfeiture Debit

=

NIL

Capital Reserve

=

1,500

 

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