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Question 7:

Eastern Company Limited, having an authorised capital of Rs 10,00,000 in shares of Rs 10 each, issued 50,000 shares at a premium of Rs 3 per share payable as follows :

 

On Application

Rs 3 per share

On Allotment (including premium)

Rs 5 per share

On first call (due three months after allotment) and the balance as and when required.

 

Rs 3 per share

 

Applications were received for 60,000 shares and the directors allotted the shares as follows :

(a) Applicants for 40,000 shares received shares, in full.

(b) Applicants for 15,000 shares received an allotment of 8,000 shares.

(c) Applicants for 500 shares received 200 shares on allotment, excess money being returned.

 

All amounts due on allotment were received.

The first call was duly made and the money was received with the exception of the call due on 100 shares.

Give journal and cash book entries to record these transactions of the company. Also prepare the Balance Sheet of the company.

 

Answer:

Note: In order to solve this question, applicants of category C has been assumed as 5000  instead of 500 and allotment to the applicants of this category has been taken as 2000 in place of 200. 

Books of Eastern Company Limited

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Share Application A/c

Dr.

 

1,80,000

 

 

 

To Share Capital A/c

 

 

1,50,000

 

 

To Share Allotment A/c

 

 

30,000

 

(Share Application money for 50,000 shares transferred to Share Capital Account and the excess money transferred to Share Allotment Account)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

2,50,000

 

 

 

To Share Capital A/c

 

 

1,00,000

 

 

To Share Premium A/c

 

 

1,50,000

 

(Allotment money due on 50,000 share @ Rs 5 per share including Rs 3 security premium)

 

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

1,50,000

 

 

 

To Share Capital A/c

 

 

 

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