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.
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| 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 |
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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 |
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| Bank A/c (24,000 shares × Rs 3 each) | Dr. |
| 72,000 |
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To Equity Share Application A/c |
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| 72,000 | ||
(Share application money received for 24,000 shares at Rs 3 each) |
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Equity Share Application A/c | Dr. | 72,000 |
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To Share Capital A/c (11,000 shares × Rs 2 each) |
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| 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) |
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Share Allotment A/c (11,000 shares × Rs 4 each) | Dr. | 44,000 |
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To Securities Premium A/c(11,000 shares × Re 1 each) |
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| 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) |
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Bank A/c (see WN2) | Dr. | 8,700 |
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Calls-in-Arrears A/c | Dr. | 300 |
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To Share Allotment A/c |
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| 9,000 | ||
(Share allotment money received after adjustment of excess application money) |
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Share First A/c | Dr. | 33,000 |
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To Share Capital A/c (11,000 shares × Rs 3 each) |
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| 33,000 | ||
(Share first call due on 11,000 shares at Rs 3 each) |
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Bank A/c (see WN3) | Dr. | 28,100 |
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Calls-in-Arrears A/c (300 shares × Rs 3 each) | Dr. | 900 |
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Calls-in-Advance A/c | Dr. | 4,000 |
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To Share First and Final Call A/c |
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| 33,000 | ||
(Share first and final call received and calls in advance adjusted) |
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Share Final Call A/c | Dr. | 22,000 |
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To Share Capital A/c |
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| 22,000 | ||
(Share final call due on 11,000 shares at Rs 2 each) |
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Bank A/c (see WN4) | Dr. | 21,400 |
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Calls-in-Arrears A/c (300 shares × Rs 2 each) | Dr. | 6,00 |
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To Share Final Call A/c |
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| 22,000 | ||
(Share final call received on all share except 300 shares) |
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Share Capital A/c (300 shares × Rs 10 each) | Dr. | 3,000 |
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Securities Premium A/c (300 shares × Rs 1 each) | Dr. | 300 |
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To Share Forfeiture A/c (see WN5) |
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| 1,500 | ||
To Call-in-Arrears A/c |
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| 1,800 | ||
(300 shares forfeited on account non-payment allotment and calls) |
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Bank A/c (300 shares × Rs 11 each) | Dr. | 3,300 |
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To Share Capital A/c (300 shares × Rs 10 each) |
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| 3,000 | ||
To Securities Premium A/c (300 shares × Re 1 each) |
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| 300 | ||
(300 shares of Rs 10 each reissued at Rs 11 per share fully paid-up) |
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Share Forfeiture A/c | Dr. | 1,500 |
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To Capital Reserve A/c (see WN5) |
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| 1,500 | ||
(Balance of Share Forfeiture Account transferred to Capital Reserve Account) |
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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 |
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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) |
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Less: Money credited to securities premium 300 shares × Re 1 | = | (300) |
Share Forfeiture Credit | = | 1,500 |
Share Forfeiture Debit | = | NIL |
Capital Reserve | = | 1,500 |