Numerical Questions Solutions

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Numerical Questions Solutions
1. Anish Limited issued 30,000 equity shares of ₹ 100 each payable at ₹ 30 on application, ₹ 50 on allotment and ₹ 20 on Ist and final call. All money was duly received.
Record these transactions in the journal of the company.
Books of Anish Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
9,00,000
To Equity Share Application A/c
9,00,000
(Being application money received for 30,000 shares @ ₹ 30 for each share)
Equity Share Application A/c
Dr.
9,00,000
To Equity Share Capital A/c
9,00,000
(Being application money transferred from eqity share application account to equity share capital account)
Equity Share Allotment A/c
Dr.
15,00,000
To Equity Share Capital A/c
15,00,000
(Being allotment money due on 30,000 shares @ ₹ 50 per share)
Bank A/c
Dr.
15,00,000
To Equity Share Allotment A/c
15,00,000
(Being share allotment money received for 30,0000 shares @ ₹ 50 per share)
Eqity Share First and Final Call A/c
Dr.
6,00,000
To Equity Share Capital A/c
6,00,000
(Being first and final call money due on 30,000 shares @ ₹ 20 per share)
Bank A/c
Dr.
6,00,000
To Equity Share First and Final Call A/c
6,00,000
(Being Share First and Final Call money received for 30,000 shares @ ₹ 20 per share)
Working Notes:
During Application Phase:
Number of Shares
= 30,000
Application money
= ₹ 30 per share
Total
= 30,000 × ₹ 30
= ₹ 9,00,000
During Allotment Phase:
Number of Shares
= 30,000
Allotment money
= ₹ 50 per share
Total
= 30,000 × ₹ 50
= ₹ 15,00,000
During First and Final Call Phase:
Number of Shares
= 30,000
First call money
= ₹ 20 per share
Total
= 30,000 × ₹ 20
= ₹ 6,00,000

2. The Adarsh Control Device Ltd. was registered with the authorised capital of ₹ 3,00,000 divided into 30,000 shares of ₹ 10 each, which were offered to the public. Amount payable as ₹ 3 per share on application, ₹ 4 per share on allotment and ₹ 3 per share on first and final call. These shares were fully subscribed and all money was dully received. Prepare journal and Cash Book.
Books of The Adarsh Control Device Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Equity Share Application A/c
Dr.
90,000
To Equity Share Capital A/c
90,000
(Being share application money received for 30,000 shares @ ₹ 3 per share)
Equity Share Allotment A/c
Dr.
1,20,000
To Equity Share Capital A/c
1,20,000
(Being share allotment money due on 30,000 shares @ ₹ 4 per share)
Equity Share First and Final Call A/c
Dr.
90,000
To Equity Share Capital A/c
90,000
(Being Sahre first and final call amount due on 30,000 shares @ ₹ 3 per share)
Date
Receipts
J.F.
Cash
₹
Bank
₹
Date
Payments
J.F.
Cash
₹
Bank
₹
To Equity Share Application A/c
90,000
By Balance c/d
3,00,000
To Equity Share Allotment A/c
1,20,000
To Equity Share First and Final Call A/c
90,000
3,00,000
3,00,000
Note: Entries related to money received during application/allotment/first and final calls is not recorded in the journal book as the problem requires these to be recorded in the cash book. So, these amounts are recorded in the bank column of the bank/double column cash book.
Working Notes:
During Application Phase:
Number of Shares
= 30,000
Application money
= ₹ 3 per share
Total
= 30,000 × ₹ 3
= ₹ 90,000
During Allotment Phase:
Number of Shares
= 30,000
Allotment money
= ₹ 4 per share
Total
= 30,000 × ₹ 4
= ₹ 1,20,000
During First and Final Call Phase:
Number of Shares
= 30,000
First call money
= ₹ 3 per share
Total
= 30,000 × ₹ 3
= ₹ 90,000

3. Software Solution India Ltd. invited applications for 20,000 equity shares of ₹ 100 each, payable ₹ 40 on application, ₹ 30 on allotment and ₹ 30 on first and final call. The company received applications for 32,000 shares. Application for 2,000 shares were rejected and money returned to applicants. Applications for 10,000 shares were accepted in full and applicants for 20,000 shares allotted half of the number of shares applied and excess application money adjusted into allotment. All money due on allotment and call was received.
Prepare journal and cash book.
Books of Software Solution India Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Equity Share Application A/c
Dr.
12,00,000
To Equity Share Capital A/c
8,00,000
To Equaity Share Allotment A/c
3,00,000
To Calls in Advancec A/c
1,00,000
(Being share application money received for 20,000 shares transfered to equity share capital account and excess money adjusted to allotment and calls in advancce accounts)
Equity Share Allotment A/c
Dr.
6,00,000
To Equity Share Capital A/c
6,00,000
(Being allotment money due on 20,000 shares @ ₹ 30 each)
Equity Share First and Final Call A/c
Dr.
6,00,000
To Equity Share Capital A/c
6,00,000
(Being first and final call money due on 20,000 shares @ ₹ 30 each)
Calls in Advance A/c
Dr.
1,00,000
To Equity Share First and Final Call A/c
1,00,000
(Being calls in advance amount adjusted to the equity share first and final call account)
Date
Receipts
J.F.
Cash
₹
Bank
₹
Date
Payments
J.F.
Cash
₹
Bank
₹
To Equity Share Application A/c
12,80,000
By Equity Share Application A/c
80,000
To Equity Share Allotment A/c
3,00,000
By Balance c/d
20,00,000
To Equity Share First and Final Call A/c
5,00,000
20,80,000
20,80,000
Note: In the problem, it is given that all the excess money received on the applications is adjusted to the allotment account. However, the money received on the excess applications (₹ 4,00,00) is more than what can be adjusted to the allotment account (₹ 3,00,000). So, the excess money after adjustment to the allotment account is further adjusted to the Calls in Advance account (₹ 1,00,000).
Working Notes:
During Application Phase:
No. of applications received
= 32,000
Application Money
= ₹ 40 per share
Total Application money
received
= 32,000 × ₹ 40
= ₹ 12,80,000
No. of Applications rejected
= 2,000
Amount refunded
= 2,000 × ₹ 40
(for rejected applications)
= ₹ 80,000
Application Money Accepted
= ₹ 12,80,000 – ₹ 80,000
= ₹ 12,00,000
No. of applications fully accepted
= 10,000
No. of applications accepted
on pro-rata basis
= 20,000
No. of shares alloted
{= 20,000 × \dfrac{1}{2}}
(on pro-rata)
= 10,000
Excess application money
= 10,000 × ₹ 40
= ₹ 4,00,000
Excess money adjusted
= 10,000 × ₹ 30
(to allotment account)
= ₹ 3,00,000
Excess money remaining
= ₹ 4,00,000 – ₹ 3,00,000
(after adjustment to allotment account)
= ₹ 1,00,000
Adjusted to First and Final Call
= ₹ 1,00,000

4. Rupak Ltd. issued 10,000 shares of ₹ 100 each payable ₹ 20 per share on application, ₹ 30 per share on allotment and balance in two calls of ₹ 25 per share. The application and allotment money were duly received. On first call, all members paid their dues except one member holding 200 shares, while another member holding 500 shares paid for the balance due in full. Final call was not made.
Give journal entries and prepare cash book.
Rupak Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Share Application A/c
Dr.
2,00,000
To Share Capital A/c
2,00,000
(Being application money received for 10,000 shares transferred to share capital account)
Share Allotment A/c
Dr.
3,00,000
To Share Capital A/c
3,00,000
(Being allotment money due on 10,000 shares @ ₹ 30 each)
Share First Call A/c
Dr.
2,50,000
To Share Capital A/c
3,50,000
(Being Share First Call amount due on 10,000 shares @ ₹ 25 each)
Calls in Arrears A/c
Dr.
5,000
To Share First Call A/c
5,000
(Being call in arrears on 200 shares @ ₹ 25 each)
Date
Recepits
J.F.
Cash
₹
Bank
₹
Date
Payments
J.F.
Cash
₹
Bank
₹
To Share Application A/c
2,00,000
By Balance c/d
7,57,500
To Share Allotment A/c
3,00,000
To Share First Call A/c
2,45,000
To Calls in Advance A/c
12,500
7,57,500
7,57,500
Working Notes:
During Application Phase:
No. of shares
= 10,000
Application money
= ₹ 20 per share
Total Application money
= 10,000 × ₹ 20
= ₹ 2,00,000
During Allotment Phase:
No. of shares
= 10,000
Allotment money
= ₹ 25 per share
Total Allotment money
= 10,000 × ₹ 25
= ₹ 2,50,000
During First Call Phase:
No. of shares
= 10,000
First call money
= ₹ 25 per share
Total First Call money due
= 10,000 × ₹ 25
= ₹ 2,50,000
No. of shares in arrears
= 200
Calls in Arrears Money
= 200 × ₹ 25
= ₹ 5,000
Money received on first call
= ₹ 2,50,000 – ₹ 5,000
= ₹ 2,45,000
Calls in Advance:
Second and final call money
= ₹ 25 per share
No. of shares
= 500
Calls in advance money
= 500 × ₹ 25
= ₹ 12,500

5. Mohit Glass Ltd. issued 20,000 shares of ₹ 100 each at ₹ 110 per share, payable ₹ 30 on application, ₹ 40 on allotment (including Premium), ₹ 20 on first call and ₹ 20 on final call. The applications were received for 24,000 shares and allotted 20,000 shares and rejected 4,000 shares and amount returned thereon. The money was duly received.
Give journal entries.
Books of Mohit Glass Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
7,20,000
To Share Application A/c
7,20,000
(Being application money received on 24,000 shares @ ₹ 30 each)
Share Application A/c
Dr.
7,20,000
To Share Capital A/c
6,00,000
To Bank A/c
1,20,000
(Being share application money for 20,000 shares @ ₹ 30 each transferred to the share capital account and the balance refunded)
Share Allotment A/c
Dr.
8,00,000
To Share Capital A/c
6,00,000
To Securities Premium Reserve A/c
2,00,000
(Being allotment money and premium amount due on 20,000 shares @ ₹ 30 and @ ₹ 10 respectively)
Bank A/c
Dr.
8,00,000
To Share Allotment A/c
8,00,000
(Being allotment money received on 20,000 shares @ ₹ 30 including @ ₹ 10 premium)
Share First Call A/c
Dr.
4,00,000
To Share Capital A/c
4,00,000
(Being share first call money due on 20,000 shares @ ₹ 20 each)
Bank A/c
Dr.
4,00,000
To Share First Call A/c
4,00,000
(Being share first call money received on 20,000 shares @ ₹ 20 each)
Share Second and Final Call A/c
Dr.
4,00,000
To Share Capital A/c
4,00,000
(Being share second and final call money due on 20,000 shares @ ₹ 20 each)
Bank A/c
Dr.
4,00,000
To Share Second and Final Call A/c
4,00,000
(Being share second and final call money received on 20,000 shares @ ₹ 20 per share)
Working Notes:
During Application Phase:
No. of applications received
= 24,000
Application money
= ₹ 30 per share
Total application money received
= 24,000 × ₹ 30
= ₹ 7,20,000
No. of applications rejected
= 4,000
Application money refunded
= 4,000 × ₹ 30
= ₹ 1,20,000
Transfered to share capital account
= 20,000 × ₹ 30
= ₹ 6,00,000
During Allotment Phase:
Allotment money
= ₹ 30 per share
Premium
= ₹ 10 per share
Total allotment money
= 20,000 × ₹ 30
= ₹ 6,00,000
Total Premium
= 20,000 × ₹ 10
= ₹ 2,00,000
Total amount received
= ₹ 6,00,000 + ₹ 2,00,000
= ₹ 8,00,000

6. A limited company offered for subscription of 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share, 2,00,000 10% Preference shares of ₹ 10 each at par.
The amount on share was payable as under :
Equity Shares
Preference Shares
On Application
₹ 3 per share
₹ 3 per share
On Allotment
₹ 5 per share
(including premium)
₹ 4 per share
On First Call
₹ 4 per share
₹ 3 per share
the shares were fully subscribed, called-up and paid.
Record these transactions in the journal and cash book of the company:
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Equity Share Application A/c
Dr.
3,00,000
10% Preference Share Application A/c
Dr.
6,00,000
To Equity Share Capital A/c
3,00,000
To 10% Preference Share Capital A/c
6,00,000
(Being application money received on equity and preference shares transferred to the respective share capital accounts)
Equity Share Allotment A/c
Dr.
5,00,000
10% Preference Share Allotment A/c
Dr.
8,00,000
To Equity Share Capital A/c
3,00,000
To Securities Premium Reserve A/c
2,00,000
To 10 % Preferene Share Capital A/c
8,00,000
(Being allotment money including premium due on both equity and 10% preference shares)
Equity Share First and Final Call A/c
Dr.
4,00,000
10% Preference Share First and Final Call A/c
Dr.
6,00,000
To Equity Share Capital A/c
4,00,000
To 10% Preference Share Capital A/c
6,00,000
(Being first and final call money due on both equity and preference shares)
Date
Particulars
J.F.
Cash
₹
Bank
₹
Date
Particulars
J.F.
Cash
₹
Bank
₹
To Equity Share Application A/c
3,00,000
By Balance c/d
32,00,000
To 10% Preference Share Application A/c
6,00,000
To Equity Share Allotment A/c
5,00,000
To 10% Preference Share Allotment A/c
8,00,000
To Equity Share First and Final Call A/c
4,00,000
To 10% Preference Share First and Final Call A/c
6,00,000
32,00,000
32,00,000
Working Notes:
During Application Phase:
No. of equity shares
= 1,00,000
Equity share application money
= ₹ 3 per share
Total equity share application money
= 1,00,000 × ₹ 3
= ₹ 3,00,000
No. of preference shares
= 2,00,000
Preference share application money
= ₹ 3 per share
Total preference share application money
= 2,00,000 × ₹ 3
= ₹ 6,00,000
During Allotment Phase:
Equity share allotment money
(including premium)
= ₹ 5 per share
Total equity share allotment money
= 1,00,000 × ₹ 5
= ₹ 5,00,000
Equity share premium
= ₹ 2 per share
Total Equity Share Premium
= 1,00,000 × ₹ 2
= ₹ 2,00,000
Trasnferred to Capital Account
= ₹ 5,00,000 – ₹ 2,00,000
= ₹ 3,00,000
Preference share allotment money
= ₹ 4 per share
Total preference share allotment money
= 2,00,000 × ₹ 4
= ₹ 8,00,000
During First and Final Call Phase:
Equity share call money
= ₹ 4 per share
Total equity share call money
= 1,00,000 × ₹ 4
= ₹ 4,00,000
Preference share call money
= ₹ 3 per share
Total preference share call money
= 2,00,000 × ₹ 3
= ₹ 6,00,000

7. Eastern Company Limited, with an authorised capital of ₹ 10,00,000 is divided into equity shares of ₹ 10 each, issued 50,000 equity shares at a premium of ₹ 3 per share payable as follows:
On Application
₹ 3 per share
On Allotment (including premium)
₹ 5 per share
On first call (due three months after allotment) and the balance as and when required.
₹ 3 per share
Applications were received for 60,000 shares and the directors alloted the shares as follows :
(a)
Applicants for 40,000 shares received in full.
(b)
Applicants for 15,000 shares received an allotment of 8,000 shares.
(c)
Applicants for 5000 shares received on allotment of 2000 shares, 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.
Books of Eastern Company Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Equity Share Application A/c
Dr.
1,71,000
To Equity Share Capital A/c
1,50,000
To Equity Share Allotment A/c
21,000
(Being equity share application money transferred to share capital account and the excess money transferred to share allotment account)
Equity Share Allotment A/c
Dr.
2,50,000
To Equity Share Capital A/c
1,00,000
To Equity Share Premium and Reserve A/c
1,50,000
(Being equity share allotment mnoey due on 50,000 shares @ ₹ 5 per share including premium)
Equity Share First Call A/c
Dr.
1,50,000
To Equity Share Capital A/c
1,50,000
(Being equity share first call amount due on 50,000 shares @ ₹ 3 per share)
Calls in Arrears A/c
Dr.
300
To Equity Share First Call A/c
300
(Being calls in arrears after the first call on 100 shares @ ₹ 3 per share)
Date
Particulars
J.F.
Cash
₹
Cash
₹
Date
Particulars
J.F.
Cash
₹
Cash
₹
To Equity Share Application A/c
1,80,000
By Bank A/c
9,000
To Equity Share Allotment A/c
2,29,000
By Balance c/d
5,49,700
To Equity Share First Call A/c
1,49,700
5,58,700
5,58,700
Eastern Company Limited
Balance Sheet
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’ Funds
a. Share Capital
1
3,99,700
b. Reserves and Surpluses
2
1,50,000
2. Non-Current Liabilities
3. Current Liabilities
Total
5,49,700
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents
3
5,49,700
Total
5,49,700
Note to Accounts:
Note
No.
Particulars
Amount
₹
1
Share Capital
Authorised Share Capital
1,00,000 shares of ₹ 10 each
10,00,000
Issued Share Capital
50,000 shares of ₹ 10 each
5,00,000
Subscribed, Called up and Paid up Share Capital
50,000 shares of ₹ 10 each, ₹ 8 called up
4,00,000
Calls-in-Arrears
(300)
3,99,700
2
Reserves and Surplus
Securities Premium
1,50,000
3
Cash and Cash Equivalents
Cash at Bank
5,49,700
Working Notes:
During Application Phase:
Application money
= ₹ 3 per share
Total No. of applications received
= 60,000
Total Application money received
= 60,000 × ₹ 3
= ₹ 1,80,000
Case A:
No. of applications
= 40,000
Application money received
= 40,000 × ₹ 3
= ₹ 1,20,000
Case B
No. of applications
= 15,000
Total Application money
= 15,000 × ₹ 3
= ₹ 45,000
No. of shares alloted on pro-rata basis
= 8,000
Application money transferred
= 8,000 × ₹ 3
(to share capital account)
= ₹ 24,000
Application money adjusted
= ₹ 45,000 – ₹ 24,000
(to Share Allotment account)
= ₹ 21,000
Case C:
No. of applications
= 5,000
No. of applications accepted
= 2,000
Application money accepted
= 2,000 × ₹ 3
= ₹ 6,000
No. of applications rejected
= 3,000
Excess Amount Refunded
= 3,000 × ₹ 3
= ₹ 9,000
No. of shares alloted
= 50,000
Application money transferred
= 50,000 × ₹ 3
(to Share Capital Amount)
= ₹ 1,50,000
During Allotment Phase:
Allotment money
(including premium)
= ₹ 5 per share
Total Allotment money due
= 50,000 × ₹ 5
= ₹ 2,50,000
Premium
= ₹ 3 per share
Total Premium
= 50,000 × ₹ 3
= ₹ 1,50,000
Application money adjusted
(to allotment account)
= ₹ 21,000
Allotment amount received
= ₹ 2,50,00 – ₹ 21,000
= ₹ 2,29,000
Transferred to Share Capital Account
= ₹ 2,50,000 – ₹ 1,50,000
= ₹ 1,00,000
During First Call Phase:
First call money
= ₹ 3 per share
First call money due
= 50,000 × ₹ 3
= ₹ 1,50,000
No. shares in calls in arrears
= 100
Calls in Arrears
= 100 × ₹ 3
= ₹ 300
First call money received
= ₹ 1,50,000 – ₹ 300
= ₹ 1,49,700

8. Sumit Machine Ltd. issued 50,000 shares of ₹ 100 each at premium of 5%. The shares were payable ₹ 25 on application, ₹ 50 on allotment and ₹ 30 on first and final call. The issue was fully subscribed and money was duly received except the final call on 400 shares. The premium was adjusted on allotment.
Give journal entries and prepare the balance sheet.
Books of Sumit Machine Ltd
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
12,50,000
To Share Application A/c
12,50,000
(Being share application money received on applications for 50,000 shares @ ₹ 25 per share)
Share Application A/c
Dr.
12,50,000
To Share Capital A/c
12,50,000
(Being share application money of 50,000 shares transferred to share capital account)
Share Allotment A/c
Dr.
25,00,000
To Share Capital A/c
22,50,000
To Securities Premium Reserve A/c
2,50,000
(Being share allotment money due on 50,000 shares @ ₹ 40 each offered at a premium of 5%)
Bank A/c
Dr.
25,00,000
To Share Allotment A/c
25,00,000
(Being share allotment money received for 50,000 shares @ ₹ 40 per share)
Share First and Final Call A/c
Dr.
15,00,000
To Share Capital A/c
15,00,000
(Being share first and final call money due on 50,000 shares @ ₹ 30 per share)
Bank A/c
Dr.
14,88,000
Calls in Arrears A/c
Dr.
12,000
To Share First and Final Call A/c
15,00,000
Balance Sheet of Sumit Machine Ltd.
Particulars
Note
No
Amount
₹
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
1
49,88,000
b. Reserves and Surplus
2
2,50,000
2. Non-Current Liabilities
3. Current Liabilities
Total
52,38,000
II. Assets
1. Non-current Assets
a. Other Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents
3
52,38,000
Total
52,38,000
Note to Accounts:
Note
No.
Particulars
Amount
₹
1
Share Capital
Authorised Share Capital
….. shares of ₹ 100 each
–
Issue of Share Capital
50,000 shares of ₹ 100 each
50,00,000
Subscribed, Called-up and Paid-up Share Capital
50,000 shares of ₹ 100 each
50,00,000
Calls in Arrears
(12,000)
49,88,000
2
Reserves and Surplus
Securities and Premium Reserve
2,50,000
3
Cash and Cash Equivalents
Cash at Bank
52,38,000
Working Notes:
During Application Phase:
Application Money
= ₹ 25 per share
No. of applications
= 50,000
Total Application money
= 50,000 × ₹ 25
(due/received)
= ₹ 12,50,000
During Allotment Phase:
Allotment Money
= ₹ 50 per share
Total Allotment Money
= 50,000 × ₹ 50
(due/received)
= ₹ 25,00,000
Premium
{= ₹~100 × \dfrac{5}{100}}
= ₹ 5 per share
Total Premium
= 50,000 × ₹ 5
= ₹ 2,50,000
Transferred to Capital Account
= ₹ 25,00,000 – ₹ 2,50,000
= ₹ 22,50,000
During First Call Phase:
First Call Money
= ₹ 30 per share
No. of shares in arrears
= 400
No. of shares paid
= 50,000 – 400
= 49,600
First call money due
= 50,000 × ₹ 30
= ₹ 15,00,000
Calls in Arrears
= 400 × ₹ 30
= ₹ 12,000
First Call Money received
= ₹ 15,00,000 – ₹ 12,000
= ₹ 14,88,000

9. Kumar Ltd. purchased assets of ₹ 6,30,000 from Bhanu Oil Ltd. Kumar Ltd. issued equity share of ₹ 100 each fully paid in consideration. What journal entries will be made, if the shares are issued, (a) at par, and (b) at premium of 20%.
Case (a): When the shares are issued at par:
Number of shares that can be issued
{= \dfrac{₹~6,30,000}{₹~100}}
= 6,300
Books of Kumar Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Sundry Assets A/c
Dr.
6,30,000
To Bhanu Oil Ltd A/c
6,30,000
(Being assets purchased on credit from the vendor Bhanu Oil Ltd.)
Bhanu Oild Ltd A/c
Dr.
6,30,000
To Equity Share Capital A/c
6,30,000
(Being 6,300 shares @ ₹ 100 per share issued at par to Bhanu Oil Ltd)
Case (b): When the shares are issued @ a premium of 20%
Share premium price
{= ₹~100 × \dfrac{120}{100}}
= ₹ 120
Number of shares that can be issued
{= \dfrac{₹~6,30,000}{₹~120}}
= 5,250
Books of Kumar Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Sundry Assets A/c
Dr.
6,30,000
To Bhanu Oil Ltd A/c
6,30,000
(Being assets purchased on credit from the vendor Bhanu Oil Ltd.)
Bhanu Oil Ltd A/c
Dr.
6,30,000
To Equity Share Capital A/c
6,250,000
To Securities Premium Reserve A/c
1,05,000
(Being 5,250 shares @ ₹ 120 each including ₹ 20 premium issued to Bhanu Oil Ltd. in consideration of the amount due to them for the assets purchased)

10. Bansal Heavy Machine Ltd. purchased machine worth ₹ 3,80,000 from Handa Trader. Payment was made as ₹ 50,000 cash and remaining amount by issue of equity shares of the face value of ₹ 100 each fully paid at an issue price of ₹ 110 each.
Give journal entries to record the above transaction.
Bansal Heavy Machine Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Machinery A/c
Dr.
3,80,000
To Cash A/c
50,000
To Handa Traders A/c
3,30,000
(Being machine purchased from Handa Traders for ₹ 3,80,000 and a cash payment of ₹ 50,000 made)
Handa Traders A/c
Dr.
3,30,000
To Equity Share Capital A/c
3,00,000
To Securities Premium Reserve A/c
30,000
(Being 3,000 shares @ ₹ 110 each including ₹ 10 premium issued to Handa Traders in consideration of the machine purchased from them)
Working Notes:
Face value
= ₹ 100 per share
Premium
= ₹ 10
Premium Price
= ₹ 110 per share
Amount due to Handa Traders
= ₹ 3,30,000
No. of shares issued at premium
{= \dfrac{₹~3,30,000}{₹~110}}
= 3,000
Face value of 3,000 shares
= 3,000 × ₹ 100
= ₹ 3,00,000
Premium on 3,000 shares
= 3,000 × ₹ 10
= ₹ 30,000

11. Naman Ltd. issued 20,000 shares of ₹ 100 each, payable ₹ 25 on application, ₹ 30 on allotment, ₹ 25 on first call and the balance on final call. All money duly received except Anubha, who holding 200 shares did not pay allotment and calls money and Kumkum, who holding 100 shares did not pay both the calls. The directors forfeited the shares of Anubha and Kumkum.
Give journal entries.
Books of Naman Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
5,00,000
To Share Application A/c
5,00,000
(Being share application money received for 20,000 shares @ ₹ 25 per share)
Share Application A/c
Dr.
5,00,000
To Share Capital A/c
5,00,000
(Being share application money received for 20,000 shares @ ₹ 25 for each share transferred to the share capital account)
Share Allotment A/c
Dr.
6,00,000
To Share Capital A/c
6,00,000
(Being share allotment money due on 20,000 shares @ ₹ 30 per share)
Bank A/c
Dr.
5,94,000
Calls in Arrears A/c
Dr.
6,000
To Share Allotment A/c
6,00,000
(Being share allotment money received for 19,800 shares @ ₹ 30 per share and the amount due on 200 shares went into calls in arrears)
Share First Call A/c
Dr.
5,00,000
To Share Capital A/c
5,00,000
(Being share first call money due on 20,000 shares @ ₹ 25 per share)
Bank A/c
Dr.
4,92,500
Calls in Arrears A/c
Dr.
7,500
To Share First Call A/c
5,00,000
(Being share first call money received for 19,700 shares @ ₹ 25 per share and the amount due on 300 shares went into calls in arrears)
Share Second and Final Call A/c
Dr.
4,00,000
To Share Capital A/c
4,00,000
(Being share second and final call money due on 20,000 shares @ ₹ 20 per share)
Bank A/c
Dr.
3,94,000
Calls in Arrears A/c
Dr.
6,000
To Share Second and Final call A/c
4,00,000
(Being share second and final call money received for 19,700 shares @ ₹ 20 per share and the amount due on 300 share went into calls in arrears)
Share Capital A/c
Dr.
30,000
To Share Forfeiture A/c
10,500
To Calls in Arrears A/c
19,500
(Being 300 forfeited on account of failure to pay the allotment/call money due)
Working Notes:
During Application Phase:
Application money
= ₹ 25 per share
No. of Shares
= 20,000
Total application money
= 20,000 × ₹ 25
= ₹ 5,00,000
During Allotment Phase:
Allotment money
= ₹ 30 per share
No. of shares in arrears
= 200
No. of shares paid
= 20,000 – 200
= 19,800
Total allotment money received
= 19,800 × ₹ 30
= ₹ 5,94,000
Call in Arrears
= 200 × ₹ 30
= ₹ 6,000
During First Call Phase:
First Call Money
= ₹ 25 per share
No. of shares in arrears
= 200 + 100
= 300
No. of shares paid
= 20,000 – 300
= 19,700
Total first call money received
= 19,700 × ₹ 25
= ₹ 4,92,500
Calls in Arrears
= 300 × ₹ 25
= ₹ 7,500
During Second and Final Call Phase:
Second and Final Call Money
= ₹ 20 per share
No. of shares in arrears
= 200 + 100
= 300
No. of shares paid
= 20,000 – 300
= 19,700
Total money received
= 19,700 × ₹ 20
= ₹ 3,94,000
Calls in Arrears
= 300 × ₹ 20
= ₹ 6,000
Forefeiture Amount:
Application money of (200 + 100) shares
= 300 × ₹ 25
= ₹ 7,500
Allotment money of 100 shares
= 100 × ₹ 30
= ₹ 3,000
Total forfeited amount
= ₹ 7,500 + ₹ 3,000
= ₹ 10,500
Calls in Arrears from allotment phase
= ₹ 6,000
Calls in Arrears from first call phase
= ₹ 7,500
Calls in Arrears from second and final call phase
= ₹ 6,000
Total Calls in Arrears
= ₹ 6,000 + ₹ 7,500 + ₹ 6,000
= ₹ 19,500
Share capital of 300 forfeited shares
= 300 × ₹ 100
= ₹ 30,000
12. Kishna Ltd. issued 15,000 shares of ₹ 100 each at a premium of ₹ 10 per share, payable as follows:
On application
₹ 30
On allotment
₹ 50 [including premium]
On first and final call
₹ 30
All the shares subscribed and the company received all the money due, with the exception of the allotment and call money on 150 shares. These shares were forfeited and reissued to Neha as fully paid share at an issue price of ₹ 12 ₹ 120 each.
Give journal entries in the books of the company.
Books of Kishna Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
4,50,000
To Share Application A/c
4,50,000
(Being share application money received for 15,000 shares @ ₹ 30 per share)
Share Application A/c
Dr.
4,50,000
To Share Capital A/c
4,50,000
(Being share application money received for 15,000 shares transferred to the share capital account)
Share Allotment A/c
Dr.
7,50,000
To Share Capital A/c
6,00,000
To Securities Premium Reserve A/c
1,50,000
(Being share allotment money due on 15,000 shares @ ₹ 50 per share including ₹ 10 premium)
Bank A/c
Dr.
7,42,500
Calls in Arrears A/c
Dr.
7,500
To Share Allotment A/c
7,50,000
(Being share allotment money received for 14,850 shares and allotment money for 150 shares being in calls in arrears)
Share First and Final Call A/c
Dr.
4,50,000
To Share Capital A/c
4,50,000
(Being share first and final call money due for 15,000 shares @ ₹ 30 per share)
Bank A/c
Dr.
4,45,500
Calls in Arrears A/c
Dr.
4,500
To Share First and Final Call A/c
4,50,000
(Being share first and final call money received for 14,850 shares @ ₹ 30 per share and first and final call money for 150 shares being in calls in arrears)
Share Capital A/c
Dr.
15,000
Securities and Premium Reserve A/c
Dr.
1,500
To Calls in Arrears A/c
12,000
To Share forfeiture A/c
4,500
(Being 150 shares forfeited due to failure to pay the allotment and first and final call money)
Bank A/c
Dr.
18,000
To Share Capital A/c
15,000
To Securities and Premium Reserve A/c
3,000
(Being 150 forfeited shares of face value ₹ 100 re-issued to Neha @ ₹ 120 per share)
Share Forfeiture A/c
Dr.
4,500
To Capital Reserve A/c
4,500
(Being balance of 150 forfeited shares transferred to capital reserve account)
Note: As share re-issue price is more than face value (shares are not re-issued at a discount), all the forfeited amount on the re-issued shares will be transferred to the capital reserve.
Working Notes:
During Applications Phase:
Application money
= ₹ 30 per share
No. of applications
= 15,000
Total application money
= 15,000 × ₹ 30
= ₹ 4,50,000
During Allotment Phase:
Premium
= ₹ 10 per share
Allotment money
(including premium)
= ₹ 50 per share
Total allotment money due
= 15,000 × ₹ 50
= ₹ 7,50,000
Total Premium money due
= 15,000 × ₹ 10
= ₹ 1,50,000
Share Capital
= ₹ 7,50,000 – ₹ 1,50,000
= ₹ 6,00,000
No. of shares in arrears
= 150
No. of shares paid
= 15,000 – 150
= 14,850
Total Allotment money received
= 14,850 × ₹ 50
= ₹ 7,42,500
Calls in Arrears
= 150 × ₹ 50
= ₹ 7,500
During First and Final Call Phase:
Total First and Final Call money due
= 15,000 × ₹ 30
= ₹ 4,50,000
No. of shares
(on which call money was not received)
= 150
No. of shares
= 15,000 – 150
(on which call money was received)
= 14,850
Total First and Final money received
= 14,850 × ₹ 30
= ₹ 4,45,500
Calls in Arrears
= 150 × ₹ 30
= ₹ 4,500
During Forfeiture of shares:
No. of shares forfeited
= 150
Share Capital of Forfeited shares
= 150 × ₹ 100
= ₹ 15,000
Premium not received
= 150 × ₹ 10
= ₹ 1,500
Calls in Arrears during allotment
= ₹ 7,500
Calls in Arrears during first and final call
= ₹ 4,500
Total Calls in Arrears
= ₹ 7,500 + ₹ 4,500
= ₹ 12,000
Amount paid for application
= 150 × ₹ 30
= ₹ 4,500
Note: This amount will be forfeited
∴ Forfeited Amout
= ₹ 4,500
During re-issue of shares:
Face Value of each share
= ₹ 100
Premium collected
= ₹ 20
Share Capital
= 150 × ₹ 100
= ₹ 15,000
Total Premium paid
= 150 × ₹ 20
= ₹ 3,000
13. Arushi Computers Ltd. issued 10,000 equity shares of ₹ 100 each at 10% premium. The net amount payable as follows:
On application
₹ 20
On allotment
₹ 50 (₹ 40 + premium ₹ 10)
On first call
₹ 30
On final call
₹ 10
A shareholder holding 200 shares did not pay final call. His shares were forfeited. Out of these 150 shares were reissued to Ms.Sonia at ₹ 75 per share.
Give journal entries in the books of the company.
Books of Arushi Computers Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
2,00,000
To Equity Share Application A/c
2,00,000
(Being equity share application money received for 10,000 equity shares @ ₹ 20 per share)
Equity Share Application A/c
Dr.
2,00,000
To Equity Share Capital A/c
2,00,000
(Being equity share application money received for 10,000 shares transferred to equity share capital account)
Equty Share Allotment A/c
Dr.
5,00,000
To Equity Share Capital A/c
4,00,000
To Securities Premium Reserve A/c
1,00,000
(Being equity share allotment money due on 10,000 shares @ ₹ 50 per share including ₹ 10 premium)
Bank A/c
Dr.
5,00,000
To Share Allotment A/c
5,00,000
(Being equity share allotment money received for 10,000 shares @ ₹ 50 per share including ₹ 10 premium)
Equity Share First Call A/c
Dr.
3,00,000
To Equity Share Capital A/c
3,00,000
(Being equity share first call amount due on 10,000 shares @ ₹ 30 per share)
Bank A/c
Dr.
3,00,000
To Equity Share First Call A/c
3,00,000
(Being equity share first call amount received for 10,000 shares @ ₹ 30 per share)
Equity Share Second and Final Call A/c
Dr.
1,00,000
To Equity Share Capital A/c
1,00,000
(Being equity share second and final call money due on 10,000 shares @ ₹ 10 per share)
Bank A/c
Dr.
98,000
Calls in Arrears A/c
Dr.
2,000
To Equity Share Second and Final Call A/c
1,00,000
(Being equity share second and final call money received for 9,800 shares @ ₹ 10 per shares and 200 shares failed to pay)
Equity Share Capital A/c
Dr.
20,000
To Calls in Arrears A/c
2,000
To Equity Share Forfeiture A/c
18,000
(Being 200 equity shares forfeited due to non-receipt of second and finall call money)
Bank A/c
Dr.
11,250
Equity Share Forfeiture A/c
Dr.
3,750
To Equity Share Capital A/c
15,000
(Being 150 forfeited equity shares with a face value of ₹ 100 per share re-issued at a discounted price of @ ₹ 75 per share)
Equity Share Forfeiture A/c
Dr.
9,750
To Capital Reserve A/c
9,750
(Being the balance of 150 forfeited equity shares, after re-issuing at a discounted price, transferred to the capital reserve account)
Working Notes:
During Second and Final Call:
No. of equity shares in arrears
= 200
No. of equity shares paid
= 10,000 – 200
= 9,800
Amount Received
= 9,800 × ₹ 10
= ₹ 98,000
Amount not received
= 200 × ₹ 10
= ₹ 2,000
During Forfeiture equity shares:
No. of share fofeited
= 200
Application money received
= 200 × ₹ 20
= ₹ 4,000
Allotment money received
= 200 × ₹ 40
= ₹ 8,000
First call money received
= 200 × ₹ 30
= ₹ 6,000
Total amount received
= ₹ 4,000 + ₹ 8,000 + ₹ 6,000
= ₹ 18,000
∴ Amount forfeited
= ₹ 18,000
Share Capital equivalent
= 200 × ₹ 100
= ₹ 20,000
While Re-issuing the shares at a discount:
Face value
= ₹ 100 per share
Discount Price
= ₹ 75 per share
Share Capital of Discounted shares
= 150 × ₹ 100
= ₹ 15,000
Amount received on discounted shares
= 150 × ₹ 75
= ₹ 11,250
Amount adjusted from forfeiture account
= ₹ 15,000 – ₹ 11,250
= ₹ 3,750
While transferring to Capital Reserve:
Forfeited value of 200 shares
= ₹ 18,000
Forfeited value of 150 shares
{= ₹~18,000 × \dfrac{150}{200}}
= ₹ 13,500
Amount adjusted to discounted share capital
= ₹ 3,750
Amount transferred to capital reserve
= ₹ 13,500 – ₹ 3,750
= ₹ 9,750
14. Raunak Cotton Ltd. issued a prospectus inviting applications for 6,000 equity shares of ₹ 100 each at a premium of ₹ 20 per shares, payable as follows:
On application
₹ 20
On allotment
₹ 50 [including premium]
On first call
₹ 30
On final call
₹ 20
Applications were received for 10,000 shares and allotment was made pro-rata to the applicants of 8,000 shares, the remaining applications being refused. Money received in excess on the application was adjusted toward the amount due on allotment.
Rohit, to whom 300 shares were allotted failed to pay allotment and calls money, his shares were forfeited. Itika, who applied for 600 shares, failed to pay the two calls and her shares were also forfeited. All these shares were sold to Kartika as fully paid for ₹ 80 per share.
Give journal entries in the books of the company.
Books of Raunak Cotton Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
2,00,000
To Equity Share Application A/c
2,00,000
(Being equity share application money received on 10,000 equity shares @ ₹ 20 per share)
Equity Share Application A/c
Dr.
2,00,000
To Equity Share Capital A/c
1,20,000
To Equity Share Allotment A/c
40,000
To Bank A/c
40,000
(Being share application money received for 10,000 shares, application money for 2,000 shares adjusted to share allotment account and application money for 2,000 shares refunded)
Equity Share Allotment A/c
Dr.
3,00,000
To Equity Share Capital A/c
1,80,000
Secuiry Premium and Reserve A/c
1,20,000
(Being equity share allotment money due on 6,000 shares @ ₹ 50 including ₹ 20 premium)
Bank A/c
Dr.
2,47,000
Call in Arrears A/c
Dr.
13,000
To Equity Share Allotment A/c
2,60,000
(Being equity share allotment money received for on all shares except for 300 shares)
Share First Call A/c
Dr.
1,80,000
To Equity Share Capital A/c
1,80,000
(Being equity share first call money due on 6,000 shares @ ₹ 30 per share)
Bank A/c
Dr.
1,57,500
Calls in Arrears A/c
Dr.
22,500
To Equity Share First Call A/c
1,80,000
(Being equity share first call money received on all shares except for (300 + 450 = 700) shares)
Equity Share Second and Final A/c
Dr.
1,20,000
To Equity Share Capital A/c
1,20,000
(Being equity share second and final call money due on 6,000 shares @ ₹ 20 per share)
Bank A/c
Dr.
1,05,000
Calls in Arrears A/c
Dr.
15,000
To Equity Share Second and Final Call A/c
1,20,000
(Being equity share second and finall call money received on all shares except 750 shares)
Equity Share Capital A/c
Dr.
75,000
Securities Premium Reserve A/c
Dr.
6,000
To Calls in Arrears A/c
50,500
To Equity Share Forfeiture A/c
30,550
(Being 750 equity shares forfeited on account of non-payment of allotment and/or call money)
Bank A/c
Dr.
60,000
Equity Share Forfeiture A/c
Dr.
15,000
To Equity Share Capital A/c
75,000
(Being forfeited equity shares re-issued at a discounted price of ₹ 80 per share)
Equity Share Forfeiture A/c
Dr.
15,500
To Capital Reserve A/c
15,500
(Being remaining forfeited amount of discounted shares transferred to the capital reserve account)
Working Notes:
During Application Phase:
Application money
= ₹ 20 per share
No. of applications received
= 10,000
No. of applications considered
= 8,000
No. of applications rejected
= 10,000 – 8,000
= 2,000
Application money
= 10,000 × ₹ 20
(all applications)
= ₹ 2,00,000
Application money
= 6,000 × ₹ 20
(transferred to capital account)
= ₹ 1,20,000
Application money
= 2,000 × ₹ 20
(refunded)
= ₹ 40,000
Application money
= 2,000 × ₹ 20
(transferred to allotment account)
= ₹ 40,000
During Allotment Phase:
Amount due on allotment
= ₹ 50 per share
Premium
= ₹ 20 per share
Allotment money
= ₹ 50 – ₹ 20
= ₹ 30
Total allotment money due
= 6,000 × ₹ 50
= ₹ 3,00,000
Transferred to Share Capital
= 6,000 × 30
= ₹ 1,80,000
Transferred to premium account
= 6,000 × ₹ 20
= ₹ 1,20,000
Allotment money already paid
(in the application phase)
= ₹ 40,000
Allotment money due
= ₹ 3,00,000 – ₹ 40,000
(for 6,000 shares)
= ₹ 2,60,000
Allotment money due from Rohit
{= ₹~2,60,000 × \dfrac{300}{6,000}}
= ₹ 13,000
∴ Calls in Arrears
= ₹ 13,000
Collected from other shareholders
= ₹ 2,60,000 – ₹ 13,000
= ₹ 2,47,000
During First Call Phase:
Total No. of applications accepted
= 8,000
Shares alloted on pro-rata
= 6,000
No. of shares applied by Itika
= 600
No. of shares alloted to Itika
{= \text{No. of applied shares} × \dfrac{\text{Total No. of alloted shares}}{\text{Total No. of applied shares}}}
(on pro-rata basis)
{= 600 × \dfrac{6,000}{8,000}}
= 450
Total No. of shares in arrears
= 300 + 450
(Rohit and Ritika)
= 750
Total First call money due
= 6,000 × ₹ 30
= ₹ 1,80,000
Calls in Arrears
= 750 × ₹ 30
= ₹ 22,500
First call money received
= ₹ 1,80,000 – ₹ 22.500
= ₹ 1,57,500
During Second and Final Call Phase:
No. of shares in arrears
= 750
No. of shares paid
= 6,000 – 750
= 5,250
Calls in Arrears
= 750 × ₹ 20
= ₹ 15,000
Amount received
= 5,250 × ₹ 20
= ₹ 1,05,000
During Share Forfeiture:
No. of shares forfeited
= 750
Share capital to be debited
= 750 × ₹ 100
= ₹ 75,000
No. of shares that didn’t pay premium
= 300
Securities Premium Reserve amount to be debited
= 300 × ₹ 20
= ₹ 6,000
Total money to be debited
= ₹ 75,000 + ₹ 6,000
= ₹ 81,000
Calls in Arrears on allotment
= ₹ 13,000
Calls in Arrears on First call
= ₹ 22,500
Calls in Arrears on Second and Final call
= ₹ 15,000
Total Calls in Arrears
= ₹ 13,000 + ₹ 22,500 + ₹ 15,000
= ₹ 50,500
Amount forfeited
= ₹ 81,000 – ₹ 50,500
= ₹ 30,500
Issue of shares at a discount:
No. of shares issued
= 750
Face Value
= ₹ 100 per share
Discounted Price
= ₹ 80 per share
Discount
= ₹ 100 – ₹ 80
= ₹ 20
Amount Paid
= 750 × ₹ 80
= ₹ 60,000
Adjusted from forfeiture account
= 750 × ₹ 20
= ₹ 15,000
Share Capital of re-issued shares
= 750 × ₹ 100
= ₹ 75,000
During transfer to the Capital Reserve:
Total forfeited amount
= ₹ 30,500
Adjusted to share capital account
= ₹ 15,000
Transferred to Capital Reserve account
= ₹ 30,500 – ₹ 15,000
= ₹ 15,500
15. Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable as under :
With Application
₹ 3 per share
On allotment (including premium)
₹ 5 per share
On First call
₹ 2 per share
On Second and Final Call
₹ 2 per share
Applications were received for 1,60,000 shares. Allotment was made on prorata basis. Excess money on application was adjusted against the amount due on allotment.
Rohan, whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at ₹ 7 per share.
Record journal entries and show the transactions relating to share capital in the company’s balance sheet.
Books of Himalaya Company Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
4,80,000
To Equity Share Application A/c
4,80,000
(Being equity share application money received for 1,60,000 shares @ ₹ 3 per share)
Equity Share Application A/c
Dr.
4,80,000
To Equity Share Capital A/c
3,60,000
To Equity Share Allotment A/c
1,20,000
(Being euqity share application money received on 1,60,000 application trasnferred to equity share capital account for 1,20,000 alloted shares and the rest adjusted to equity share allotment account)
Equity Share Allotment A/c
Dr.
6,00,000
To Equity Share Capital A/c
3,60,000
To Securities Premium Reserve A/c
2,40,000
(Being equity share allotment money due on 1,20,000 shares @ ₹ 5 per share including ₹ 2 premium)
Bank A/c
Dr.
4,80,000
To Equity Share Allotment A/c
4,80,000
(Being equity share allotment money due is received)
Equity Share First Call A/c
Dr.
2,40,000
To Equity Share Capital A/c
2,40,000
(Being equity share first call money due on 1,20,000 shares @ ₹ 2 per share)
Bank A/c
Dr.
2,30,400
Calls in Arrears A/c
Dr.
9,600
To Equity Share First Call A/c
2,40,000
(Being equity share first call money received on all equity shares except 4,800 equity shares)
Equity Share Second and Final A/c
Dr.
2,40,000
To Equity Share Capital A/c
2,40,000
(Being equity share second and final call money due on 1,20,000 shares @ ₹ 2 per share)
Bank A/c
Dr.
2,30,400
Calls in Arrears A/c
Dr.
9,600
To Equity Share Second and Finall Call A/c
2,40,000
(Being equity share second and final call money received on all but 4,800 shares)
Equity Share Capital A/c
Dr.
48,000
To Calls in Arrears A/c
19,200
To Equity Share Forfeiture A/c
28,800
(Being 4,800 equity shares forfeited due to non-payment of two calls money)
Bank A/c
Dr.
33,600
Equity Share Forfeiture A/c
Dr.
14,400
To Equity Share Capital A/c
48,000
(Being 4,800 forfeited equity shares re-issued at a discount price of ₹ 7 per share)
Equity Share Forfeiture A/c
Dr.
14,400
To Capital Reserve A/c
14,400
(Being balance of forfeited equity shares transferred to the capital reserve account)
Working Notes:
During Application Phase:
No. applications received
= 1,60,000
No. of shares alloted (on pro-rata)
= 1,20,000
Total amount received
= 1,60,000 × ₹ 3
= ₹ 4,80,000
Transferred to share capital account
= 1,20,000 × ₹ 3
= ₹ 3,60,000
Adjusted to allotment account
= ₹ 4,80,000 – ₹ 3,60,000
= ₹ 1,20,000
During Share Allotment Phase:
Allotment money
= ₹ 5 per share
Premium
= ₹ 2 per share
Total Allotment money due
= 1,20,000 × ₹ 5
= ₹ 6,00,000
Allotment money due to premium reserve
= 1,20,000 × ₹ 2
= ₹ 2,40,000
Allotment money due to Share Capital
= ₹ 6,00,000 – ₹ 2,40,000
= ₹ 3,60,000
Ajusted from the oversubscribed applications
= ₹ 1,20,000
Allotment money due from shareholders
= ₹ 6,00,000 – ₹ 1,20,000
= ₹ 4,80,000
During Equity Share First Call Phase:
No. of shares in arrears
= 4,800
Calls in Arrears
= ₹ 4,800 × 2
= ₹ 9,600
First call money due
= 1,20,000 × 2
= ₹ 2,40,000
First call money received
= ₹ 2,40,000 – ₹ 9,600
= ₹ 2,30,400
During Equity Share Second and Final Call Phase:
No. of shares in arrears
= 4,800
Calls in Arrears
= ₹ 4,800 × 2
= ₹ 9,600
Second and Final call money due
= 1,20,000 × 2
= ₹ 2,40,000
Second and Final call money received
= ₹ 2,40,000 – ₹ 9,600
= ₹ 2,30,400
During forfeiture of equity shares:
No. of shares forfeited
= 4,800
Face Value of forfeited shares
= 4,800 × ₹ 10
= 48,000
Calls in Arrears during first call
= ₹ 9,600
Calls in arrears during second and final call
= ₹ 9,600
Total Calls in Arrears
= ₹ 9,600 + ₹ 9,600
= ₹ 19,200
Forfeited amount
= ₹ 48,000 – ₹ 19,200
= ₹ 28,800
Re-issue of forfeited equity shares at a discount:
Face value
= ₹ 10 per share
Discounted value
= ₹ 7 per share
Discount
= ₹ 10 – ₹ 7
= ₹ 3 per share
Total Forfeiture equity share amount
= ₹ 28,800
Payment by Teena
= 4,800 × ₹ 7
= ₹ 33,600
Adjustment from forfeited equity shares account
= 4,800 × ₹ 3
= ₹ 14,400
Balance of equity share forfeiture account
= ₹ 28,800 – ₹ 14,400
= ₹ 14,400
16. Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹ 10 each at a premium of ₹ 3 per share payable as follows:
With Application
₹ 2
On Allotment (including premium)
₹ 5
On First Call
₹ 3
On Second call
₹ 3
Applications were received for 30,000 shares and allotment was made on pro-rata basis. Money overpaid on applications was adjusted to the amount due on allotment.
Mr. Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr. Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited.
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for ₹ 9 per share, the whole of Mr. Mohit’s shares being included.
Record journal entries in the books of the Company and prepare the Balance Sheet.
Books of Prince Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
60,000
To Equity Share Application A/c
60,000
(Being equity share application money received on 30,000 shares @ ₹ 2 per share)
Equity Share Application A/c
Dr.
60,000
To Equity Share Capital A/c
40,000
To Equity Share Allotment A/c
20,000
(Being equity share application money transferred to share capital account and excess share application money adjusted to share allotment account)
Equity Share Allotment A/c
Dr.
1,00,000
To Equity Share Capital A/c
40,000
To Securities Premium Reserve A/c
60,000
(Being equity share allotment money due on 20,000 shares @ ₹ 5 per share including a premium of ₹ 3 per share)
Bank A/c
Dr.
78,400
Calls in Arrears A/c
Dr.
1,600
To Equity Share Allotment A/c
80,000
(Being equity share allotment money received from all shares except for 400 shares)
Equity Share First Call A/c
Dr.
60,000
To Equity Share Capital A/c
60,000
(Being first call money due on 20,000 shares @ ₹ 3 per share)
Bank A/c
Dr.
57,000
Calls in Arrears A/c
Dr.
3,000
To Equity Share First Call A/c
60,000
(Being first call money received on 20,000 shares except for 700 shares)
Equity Share Capital A/c
Dr.
2,800
Securities Premium Reserve A/c
Dr.
1,200
To Equity Share Forfeiture A/c
1,200
To Calls in Arrears A/c
2,800
(Being 400 shares of Mr. Mohit forfeited due to non-payment of allotment and first call money)
Equity Share Second and Final Call A/c
Dr.
58,800
To Equity Share Capital A/c
58,800
(Being Being share second and finall call money)
Bank A/c
Dr.
57,000
Calls in Arrears A/c
Dr.
1,800
To Equity Share Second and Final Call A/c
58,800
(Being equity share second and final call money due on 19,600 shares except for 600 shares)
Share Capital A/c
Dr.
6,000
To Equity Share Forfeiture A/c
2,400
To Calls in Arrears A/c
3,600
(Being 600 euqity shares forfeited due to non-payment of calls money)
Bank A/c
Dr.
7,200
Equity Share Forfeiture A/c
Dr.
800
To Equity Share Capital A/c
8,000
(Being 800 equity shares re-issued at a discounted price of ₹ 9 each)
Equity Share Forfeiture A/c
Dr.
2,000
To Capital Reserve A/c
2,000
(Being profit on re-issue of equity shares transferred to Capital Reserve)
Price Limited
Balance Sheet
Particulars
Note
No.
Amount
₹
I. Equity and Liabilities
1. Shareholders’ Fund
a. Share Capital
1
19,98,000
b. Reserves and Surplus
2
6,01,600
2. Non-Current Liabilities
3. Current Liabilities
Total
25,99,600
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents
3
25,99,000
Total
25,99,600
Note To Accounts:
Note
No.
Particulars
Amount
₹
1
Share Capital
Authorised Share Capital
…… shares of ₹ 10 each
–
Issued Share Capital
2,00,000 shares of ₹ 10 each
20,00,000
Subscribed, Called-up and Paid-up Share Capital
1,99,800 shares of ₹ 10 each
9,98,000
2
Reserves and Surplus
Securities Premium
5,98,800
Capital Reserve
2,800
6,01,600
3
Cash and Cash Equivalents
Cash at Bank
25,99,600
Working Notes:
During Share Application Phase:
No. of applications received
= 30,000
No. of shares allotted
= 20,000
Total application money received
= 30,000 × ₹ 2
= ₹ 60,000
Adjusted to share capital account
= 20,000 × ₹ 2
= ₹ 40,000
Adjusted to share allotment account
= ₹ 60,000 – ₹ 40,000
= ₹ 20,000
During Share Allotment Phase:
Total Allotment money
= 20,000 × ₹ 5
= ₹ 1,00,000
Adjusted from application money
= ₹ 20,000
Allotment money due on 20,000 shares
= ₹ 1,00,000 – ₹ 20,000
= ₹ 80,000
No. of shares in arrears
= 400
Calls in Arrears
{= \text{Total Amount Due} × \dfrac{\text{No. of shares Defaulted}}{\text{Total No. of shares}}}
{= ₹~80,000 × \dfrac{400}{20,000}}
= ₹ 1,600
Allotment money actually received
= ₹ 80,000 – ₹ 1,600
= ₹ 78,400
During Share First Call Phase:
Total First call money
= 20,000 × ₹ 3
= ₹ 60,000
No. of shares alloted to Mr. Mohit
= 400
No. of shares alloted to Mr. Joly
= 600
First call money in arrears from Mr. Mohit
{= \text{Total Amount Due} × \dfrac{\text{No. of shares Defaulted}}{\text{Total No. of shares}}}
{= ₹~60,000 × \dfrac{400}{20,000}}
= ₹ 1,200
First call money in arrears from Mr. Joly
{= \text{Total Amount Due} × \dfrac{\text{No. of shares Defaulted}}{\text{Total No. of shares}}}
{= ₹~60,000 × \dfrac{600}{20,000}}
= ₹ 1,800
Calls in Arrears
= ₹ 1,200 + ₹ 1,800
= ₹ 3,000
Amount received after first call
= ₹ 60,000 – ₹ 3,000
= ₹ 57,000
Forefeiture of Mohit’s shares after first call:
No. of shares forfeited
= 400
Share capital allocated so far
= ₹ 2 + ₹ 2 + ₹ 3
= ₹ 7
Share capital of forfeited shares
= 400 × ₹ 7
= ₹ 2,800
Premium not paid on forfeited shares
= 400 × ₹ 3
= ₹ 1,200
No. of applications applied by Mr. Mohit
{= \text{No. of shares allocated} × \dfrac{\text{Total No. of applications}}{\text{No. of shares issued}}}
{= 400 × \dfrac{30,000}{20,000}}
= 600
Application money paid by Mr. Mohit
= 600 × ₹ 2
= ₹ 1,200
Forfeiture amount
= ₹ 1,200
Calls in Arrears from allotment phase
= ₹ 1,600
Calls in Arrears from first call phase
= ₹ 1,200
Total Calls in Arrears
= ₹ 1,600 + ₹ 1,200
= ₹ 2,800
During Share Second and Finall Call Phase:
No. of shares
= 20,000 – 400
= 19,600
Share second and final call money due
= 19,600 × ₹ 3
= 58,800
During Share Second and Final Call:
Total No. of shares
= 20,000 – 400
= 19,600
Second and Final Call Amount due
= 19,600 × ₹ 3
= ₹ 58,800
No. share defaulted the payment
= 600
Share Second and Final Call amount not received
= 600 × ₹ 3
= ₹ 1,800
Amount received
= ₹ 58,800 – ₹ 1,800
= ₹ 57,000
During Forfeiture after Second and Final call phase:
No. of shares forfeited
= 600
Share Capital of forfeited shares
= 600 × ₹ 10
= ₹ 6,000
Application money paid
= ₹ 2 per share
Total Application money paid
= 600 × ₹ 2
= ₹ 1,200
Allotment money paid
= ₹ 2 per share
Total Allotment money paid
= 600 × ₹ 2
= ₹ 1,200
∴ Forfeiture Amount
= ₹ 1,200 + ₹ 1,200
= ₹ 2,400
Calls in Arrears during fist call
= ₹ 1,800
Calls in Arrears during second and final call
= ₹ 1,800
Total Calls in Arrears
= ₹ 1,800 + ₹ 1,800
= ₹ 3,600
During re-issue of shares at a discounted phase:
No. of shares re-issued
= 800
Face value
= ₹ 10
Discounted Price
= ₹ 9
Discount
= ₹ 1
Price paid by Supriya
= 800 × ₹ 9
= ₹ 7,200
No. of Mohit’s shares re-issued
= 400
Forfeited value of Mohit’s 400 shares
= ₹ 1,200
Discount adjustment from forfeited money
= 400 × ₹ 1
= ₹ 400
Transferred to capital reserve
= ₹ 1,200 – ₹ 400
= ₹ 800
No. of Mr. Joly’s shares re-issued
= 800 – 400
= 400
Forfeited value of Mr. Joly’s 600 shares
= ₹ 2,400
Forfeited value of Mr. Joly’s 400 shares
{= ₹~2,400 × \dfrac{400}{600}}
= ₹ 1,600
Discount adjustment from forfeited shares
= 400 × ₹ 1
= ₹ 400
Transferred to capital reserve
= ₹ 1,600 – ₹ 400
= ₹ 1,200
Total transfer to capital reserve
= ₹ 800 + ₹ 1,200
= ₹ 2,000
17. Life Machine Tools Limited issued 50,000 equity shares of ₹ 10 each at ₹ 12 per share, payable at to ₹ 5 on application (including premium), ₹ 4 on allotment and the balance on the first and final call.
Applications for 70,000 shares had been received. Of the cash received, ₹ 40,000 was returned and ₹ 60,000 was applied to the amount due on allotment. All shareholders paid the call due, with the exception of one shareholder of 500 shares. These shares were forfeited and reissued as fully paid at Rs.8 per share. Journalise the transactions.
Books of Life Machine Tools Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
3,50,000
To Equity Share Application A/c
3,50,000
(Being application money received on 70,000 equity shares @ ₹ 5 per share including a premium of ₹ 2)
To Equity Share Application A/c
3,50,000
To Equity Share Capital A/c
1,50,000
To Securities Premium Reserve A/c
1,00,000
To Equity Share Allotment A/c
60,000
To Bank A/c
40,000
(Being equity share application money for 60,000 shares transferred share capital account and securities premium reserve account, ₹ 60,000 adjusted to allotment account and ₹ 40,000 refunded)
Equity Share Allotment A/c
Dr.
2,00,000
To Equity Share Capital A/c
2,00,000
(Being equity share allotment money due on 50,000 shares @ ₹ 4 per share)
Bank A/c
Dr.
1,40,000
To Equity Share Allotment A/c
1,40,000
(Being equity share allotment money received)
Equity Share First and Final Call A/c
Dr.
1,50,000
To Equity Share Capital A/c
1,50,000
(Being equity share first and final call money due on 50,000 shares @ ₹ 3 per share)
Bank A/c
Dr.
1,48,500
Calls in Arrears A/c
Dr.
1,500
To Equity Share First and Final Call A/c
1,50,000
(Being equity share first and final call money received on all shares @ ₹ 3 per share except for 500 shares)
Equity Share Capital A/c
Dr.
5,000
To Calls in Arrears A/c
1,500
To Equity Share Forfeiture A/c
3,500
(Being 500 equity shares forfeited due to non-payment of first and final call money)
Bank A/c
Dr.
4,000
Equity Share Forfeiture A/c
Dr.
1,000
To Equity Share Capital A/c
5,000
(Being 500 equity shares re-issued at a discounted price of ₹ 8 per share fully paid up)
Equity Share Forfeiture A/c
Dr.
2,500
To Capital Reserve A/c
2,500
(Being profit on 500 forfeited shares transferred to capital reserves after adjustment)
Working Notes:
During Application Phase:
Face value of shares
= ₹ 10 per share
Premium Price
= ₹ 12 per share
Premium
= ₹ 12 – ₹ 10
= ₹ 2
No. of shares issued
= 50,000
Total Premium
= 50,000 × ₹ 2
= ₹ 1,00,000
Application money
= ₹ 5 – ₹ 2
= ₹ 3
Transferred to Share Capital
= 50,000 × ₹ 3
= ₹ 1,50,000
During Share Allotment Phase:
Allotment money
= ₹ 4 per share
Total Allotment money
= 50,000 × ₹ 4
= ₹ 2,00,000
Allotment money adjusted from application money
= ₹ 60,000
Allotment money still due
= ₹ 2,00,000 – ₹ 60,000
= ₹ 1,40,000
During Share First and Final Call Phase:
First and Final Call Money
= ₹ 3 per share
No. of shares in arrears
= 500
Calls in Arrears
= 500 × ₹ 3
= ₹ 1,500
Total First and Final Call money due
= 50,000 × ₹ 3
= ₹ 1,50,000
First and Final Call money received
= ₹ 1,50,000 – ₹ 1,500
= ₹ 1,48,500
During Forfeiture after first and final call:
No. of shares forfeited
= 500
Nominal value
= ₹ 10 per share
Nominal value of forfeited shares
= 500 × ₹ 10
= ₹ 5,000
Calls in Arrears
= ₹ 1,500
Forfeited amount
= ₹ 5,000 – ₹ 1,500
= ₹ 3,500
During re-issue of shares discount
No. of shares issued at discount
= 500
Nominal value
= ₹ 10 per share
Discount value
= ₹ 8 per share
Discount
= ₹ 2 per share
Total Discount Price
= 500 × ₹ 8
= ₹ 4,000
Total Discount
= 500 × ₹ 2
= ₹ 1,000
∴ Discount Adjusted from forfeited amount
= ₹ 1,000
Forfeited value of 500 shares
= ₹ 3,500
Transferred to Capital Reserve
= ₹ 3,500 – ₹ 1,000
= ₹ 2,500
18. The Orient Company Limited offered for public subscription 20,000 equity shares of ₹ 10 each at a premium of 10% payable at ₹ 2 on application; ₹ 4 on allotment including premium; ₹ 3 on First Call and ₹ 2 on Second and Final call. Applications for 26,000 shares were received. Applications for 4,000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made and all the money were received except the final call on 500 shares which were forfeited. 300 of the forfeited shares were later reissued as fully paid at ₹ 9 per share. Give journal entries and prepare the balance sheet.
Books of Orient Company Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
52,000
To Equity Share Application A/c
(Being equity share application money received for 26,000 equity shares @ ₹ 2 per share)
Equity Share Application A/c
Dr.
52,000
To Equity Share Capital A/c
40,000
To Equity Share Allotment A/c
4,000
To Bank A/c
8,000
(Being application money on 20,000 equity shares transferred to share capital account, application money for 2,000 shares adjusted to allotment account, application money for 4,000 equity shares refunded)
Equity Share Allotment A/c
Dr.
80,000
To Equity Share Capital A/c
60,000
To Securities Premium Reserve A/c
20,000
(Being equity share allotment money due on 20,000 equity shares @ ₹ 4 per share including ₹ 1 premium)
Bank A/c
Dr.
76,000
To Equity Share Allotment A/c
76,000
(Being equity share allotment money due received, after adjustment from oversubscribed applications’ money)
Equity Share First Call A/c
Dr.
60,000
To Equity Share Capital A/c
60,000
(Being Equity Share First call money due on 20,000 shares @ ₹ 3 per share)
Bank A/c
Dr.
60,000
To Equity Share First Call A/c
60,000
(Being equity share first call money received)
Equity Share Second and Final Call A/c
Dr.
40,000
To Equity Share Capital A/c
40,000
(Being equity share second and final call money due on 20,000 shares @ ₹ 2 per share)
Bank A/c
Dr.
39,000
Calls in Arrears A/c
Dr.
1,000
To Equity Share Second and Final Call A/c
40,000
(Being share equity second and final call money received on all shares except for 500 shares)
Equity Share Capital A/c
Dr.
5,000
To Equity Share Forfeiture A/c
4,000
To Calls in Arrears A/c
1,000
(Being 500 equity share forfeited due to non-payment of the second and final call money)
Bank A/c
Dr.
2,700
Equity Share Forfeiture A/c
Dr.
300
To Equity Share Capital A/c
3,000
(Being 300 forfeited equity shares re-issued at a discounted price of ₹ 9 per share fully paid)
Equity Share Forfeiture A/c
Dr.
2,100
To Capital Reserve A/c
2,100
(Being profit on 300 forfeited equity shares transferred to capital reserves after adjustment)
Balance Sheet of Orient Company Ltd.
Particulars
Note
No.
Amount
₹
I. Equity and Liabilities
1. Shareholders Funds
a. Share Capital
1
1,99,000
b. Reserves and Surplus
2
22,100
2. Non-Current Liabilities
3. Current Liabilities
Total
2,21,700
II. Assets
Non-Current Assets
2. Current Assets
Cash and Cash Equivalents
3
2,21,700
Total
2,21,700
Note to Accounts:
Note
No.
Particulars
Amount
₹
1
Share Capital
Authorised Share Capital
…… shares of ₹ 10 each
Issued Share Capital
20,000 equity shares of ₹ 10 each
2,00,000
Subscribed, Called-up and Paid-up Share Capital
19,800 equity shares of ₹ 10 each
1,98,000
Equity Share Forfeiture
2,100
1,99,660
2
Reserves and Surplus
Securities Preium Reserve
20,000
Capital Reserve
2,100
22,100
3
Cash and Cash Equivalents
Cash at Bank
2,21,700
Working Notes:
During Application Phase:
No. of Applications received
= 26,000
No. of applictions rejected
= 4,000
No. of applications considered
= 26,000 – 4,000
= 22,000
Application money
= ₹ 2 per share
Total Application money
= 26,000 × ₹ 2
= ₹ 52,000
Application money of applications accepted
= 22,000 × ₹ 2
= ₹ 44,000
Application money transferred to share capital
= 20,000 × ₹ 2
= ₹ 40,000
Application money adjusted to allotment account
= ₹ 44,000 – ₹ 40,000
= ₹ 4,000
Application money refunded
= 4,000 × ₹ 2
= ₹ 8,000
During Share Allotment Phase:
Premium
{= ₹~10 × \dfrac{10}{100}}
= ₹ 1
No. of shares
= 20,000
Total Premium
= 20,000 × ₹ 1
= ₹ 20,000
Allotment money
(including premium)
= ₹ 4
Total Allotment money
= 20,000 × ₹ 4
= ₹ 80,000
Transferred to share capital
= ₹ 80,000 – ₹ 20,000
= ₹ 60,000
Adjusted from application money
= ₹ 4,000
Allotment money collected
= ₹ 80,000 – ₹ 4,000
= ₹ 76,000
During equity share second and final call phase:
Equity share second and final call money
= ₹ 2 per share
No. of shares in arrears
= 500
No. of shares paid the money
= 20,000 – 500
= 19,500
Second and final call money received
= 19,500 × ₹ 2
= ₹ 39,000
Calls in Arrears
= 500 × ₹ 2
= ₹ 1,000
During Share Forfeiture:
No. of shares forfeited
= 500
Forfeited share capital
= 500 × 10
= ₹ 5,000
Calls in Arrears
= ₹ 1,000
Forfeited amount
= ₹ 5,000 – ₹ 1,000
= ₹ 4,000
Re-issue of shares at discount:
No. of shares re-issued
= 300
Discount Price
= ₹ 9 per share
Nominal Value
= ₹ 10 per share
Discount
= ₹ 10 – ₹ 9
= ₹ 1 per share
Amount paid
= 300 × 9
= ₹ 2,700
Amount adjusted from forfeiture account
= 300 × ₹ 1
= ₹ 300
Share Capital of forfeited shares
= 300 × ₹ 10
= ₹ 3,000
Transferring forfeited amount of re-issued shares to Capital Reserve:
Forfeited value of 500 shares
= ₹ 4,000
Forfeited value of 300 shares
{= ₹~4,000 × \dfrac{300}{500}}
= ₹ 2,400
Adjusted to discounted shares
= ₹ 300
Transferred to Capital Reserve
= ₹ 2,400 – 300
= ₹ 2,100
19. Alfa Limited invited applications for 4,00,000 of its equity shares of ₹ 10 each on the following terms :
Payable on application
₹ 5 per share
Payablle on allotment
₹ 3 per share
Payable on first and final call
₹ 2 per share
Applications for 5,00,000 shares were received. It was decided :
(a)
to refuse allotment to the applicants for 20,000 shares;
(b)
to allot in full to applicants for 80,000 shares;
(c)
to allot the balance of the available shares’ pro-rata among the other applicants; and
(d)
to utilise excess application money in part as payment of allotment money.
One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ ₹ 9 per share. Show the journal and prepare Cash book to record the above.
Books of Alfa Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Equity Share Application A/c
Dr.
24,00,000
To Equity Share Capital A/c
20,00,000
To Equity Share Allotment A/c
4,00,000
(Being application money received on 5,00,000 equity shares adjusted to share capital account and allotment account)
Equity Share Allotment A/c
Dr.
12,00,000
To Equity Share Capital A/c
12,00,000
(Being equity share allotment money due on 4,00,000 shares @ ₹ 3 per share)
Calls in Arrears A/c
Dr.
700
To Equity Share Allotment A/c
700
(Being 400 equity shares alloted on pro-rata basis failed to pay the equity share allotment amount)
Equity Share First and Final Call A/c
Dr.
8,00,000
To Equity Share Capital A/c
8,00,000
(Being equity share first and final call money due on 4,00,000 equity shares @ ₹ 2 per share)
Calls in Arrears A/c
Dr.
800
To Equity Share First and Final Call A/c
800
(Being equity share first and final call money not received on 500 shares)
Equity Share Capital A/c
Dr.
4,000
To Calls in Arrears A/c
1,500
To Equity Share Forfeiture A/c
2,500
(Being 500 equity shares forfeited due to non-payment of allotment and first and final call money)
Share Forfeiture A/c
Dr.
400
To Equity Share Capital A/c
400
(Being 400 forfeited equity shares re-issued at a discount and loss on issue charged against the forfeiture account)
Equity Share Forfeiture A/c
Dr.
2,100
To Capital Reserve A/c
2,100
(Being profit on issue of forfeited equity shares transferred to capital reserves acccount)
Date
Particulars
J.F.
Cash
₹
Bank
₹
Date
Particulars
J.F.
Cash
₹
Bank
₹
To Equity Share Appication A/c
25,00,000
By Equity Share Application A/c
1,00,000
To Equity Share Allotment A/c
7,99,300
By Balance c/d
40,02,100
To Equity Share First and Final Call A/c
7,99,200
To Equity Share Capital A/c
3,600
41,02,100
41,02,100
Working Notes:
During Equity Share Application Phase:
Application money
= ₹ 5 per share
No. of application received
= 5,00,000
No. of applications rejected
= 20,000
No. of applications approved full
= 80,000
Remaining applications
= 5,00,000 – 20,000 – 80,000
= 4,00,000
No. of equity shares available
= 4,00,000
Remaining equity shares
= 4,00,000 – 80,000
(to allot on pro-rata basis)
= 3,20,000
No. of applications whose money
= 4,00,000 – 3,20,000
adjusted to allotment
= 80,000
Application money adjusted to allotment
= 80,000 × ₹ 5
= ₹ 4,00,000
During Allotment Phase:
Allotment money
= ₹ 3 per share
Total Allotment money
= 4,00,000 × ₹ 3
= ₹ 12,00,000
Allotment money due on fully accepted shares
= 80,000 × ₹ 3
= ₹ 2,40,000
Allotment money for pro-rata shares
= ₹ 12,00,000 – ₹ 2,40,000
= ₹ 9,60,000
Adjusted from Application money
= ₹ 4,00,000
Allotment money due
= ₹ 9,60,000 – ₹ 4,00,000
= ₹ 5,60,000
No. of shares in arrears
= 400
Calls in Arrears
{= \text{Allotment money due on pro-rata shares} × \dfrac{\text{No. of Equity Shares Defaulted}}{\text{Total No. of pro rata Shares}}}
{= ₹~5,60,000 × \dfrac{400}{3,20,000}}
= ₹ 700
Allotment money received
= ₹ 2,40,000 + ₹ 5,60,000 – ₹ 700
= ₹ 7,99,300
During First and Final Call Phase:
First and Final Call Money
= ₹ 2 per share
Amount due on first and final call
= 4,00,000 × ₹ 2
= ₹ 8,00,000
No of shares in arrears
= 400
Calls in Arrears
= 400 × ₹ 2
= ₹ 800
Amount Received for first and final call
= ₹ 8,00,000 – ₹ 800
= ₹ 7,99,200
While Forfeiting the shares:
Share Capital of shares in arrears
= 400 × ₹ 10
= ₹ 4,000
Total Calls in Arrears
= ₹ 700 + ₹ 800
= ₹ 1,500
Share forfeiture amount
= ₹ 4,000 – ₹ 1,500
= ₹ 2,500
While issuing the forfeited shares at discount:
Face value
= ₹ 10 per share
Discount price
= ₹ 9 per share
Discount
= ₹ 10 – ₹ 9
= ₹ 1
No. of shares re-issued
= 400
Amount received for discounted shares
= 400 × ₹ 9
= ₹ 3,600
Adjusted from forfeited account
= 400 × ₹ 1
= ₹ 400
Forfeited value of 400 shares
= ₹ 2,500
Profit on re-issue
= ₹ 2,500 – ₹ 400
= ₹ 2,100
20. Ashoka Limited Company which had issued equity shares of ₹ 20 each at a premium of ₹ 4 per share, forfeited 1,000 shares for non-payment of final call of ₹ 2 per share. 400 of the forfeited shares were reissued at ₹ 14 per share out of the remaining shares of 200 shares reissued at ₹ 20 per share. Give journal entries for the forfeiture and reissue of shares and show the amount transferred to capital reserve and the balance in Share Forfeiture Account.
Books of Ashoka Limited Company
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Equity Share Capital A/c
Dr.
20,000
To Calls in Arrears A/c
2,000
To Equity Share Forfeiture A/c
18,000
(Being 1,000 equity shares forfeited due to non-payment of final call money of ₹ 2 per share)
Bank A/c
Dr.
5,600
Equity Share Forfeiture A/c
Dr.
2,400
To Equity Share Capital A/c
8,000
(Being 400 forfeited shares re-issued at a discounted price of ₹ 14 per share)
Bank A/c
Dr.
4,000
To Equity Share Capital A/c
4,000
(Being 200 forfeited equity shares reissued @ ₹ 20 per share)
Equity Share Forfeiture A/c
Dr.
8,400
To Capital Reserve A/c
8,400
(Being profit on re-issue of 600 forfeited shares transferred to capital reserve)
Note: As all the forfeited shares (600 shares) are re-issued at a price higher than the face value, there is not adjustment to the re-issued shares’ capital from the forfeiture account. So, all the forfeited value of these shares will be transferred to the capital reserve.
Working Notes:
During Final Call Money:
Final Call Money
= ₹ 2 per share
No. of shares defaulted the payment
= 1,000
Amount defaulted
= 1,000 × ₹ 2
= ₹ 2,000
Face Value
= ₹ 20 per share
Amount already paid
= ₹ 20 – ₹ 2
= ₹ 18 per share
Total amount already paid
= 1,000 × ₹ 18
= ₹ 18,000
Share Capital of these 1,000 shares
= 1,000 × ₹ 20
= ₹ 20,000
While re-issuing shares:
Case 1:
Disount Price
= ₹ 14 per share
Face Value
= ₹ 20 per share
Discount
= ₹ 20 – ₹ 14
= ₹ 6 per share
No. of shares re-issued
= 400
Paid by the share holder
= 400 × ₹ 14
= ₹ 5,600
Face value of these shares
= 400 × ₹ 20
= ₹ 8,000
Adjustment from forfeiture account
= 400 × ₹ 6
= ₹ 2,400
Case 2:
Face Value
= ₹ 20
Total Value
= 200 × ₹ 20
= ₹ 4,000
Profit transferred to Capital Reserve:
Forfeited value of 1,000 shares
= ₹ 18,000
Forfeited value of 600 shares
{= ₹~18,000 × \dfrac{600}{1,000}}
= ₹ 10,800
Adjusted to discounted shares
= ₹ 2,400
Transferred to Capital Reserve
= ₹ 10,800 – ₹ 2,400
= ₹ 8,400
21. Amit holds 100 shares of Rs.10 each on which he has paid ₹ 1 per share as application money. Bimal holds 200 shares of Rs.10 each on which he has paid ₹ 1 and ₹ 2 per share as application and allotment money, respectively. Chetan holds 300 shares of ₹ 10 each and has paid ₹ 1 on application, ₹ 2 on allotment and ₹ 3 for the first call. They all failed to pay their arrears and the second call of ₹ 2 per share and the directors, therefore, forfeited their shares. The shares are reissued subsequently for ₹ 11 per share as fully paid. Journalise the transactions.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Share Capital A/c
Dr.
4,800
To Calls in Arrears A/c
2,300
To Share Forfeiture A/c
2,500
(Being 600 shares with ₹ 8 called up forfeited due to non-payment of allotment/first call money/second call money)
Bank A/c
Dr.
6,600
To Share Capital A/c
6,600
To Securities Premium Reserve A/c
600
(Being 600 forfeited shares with ₹ 10 facevalue re-issued at a premium price of ₹ 11 per share)
Share Forfeiture A/c
Dr.
2,500
To Capital Reserve A/c
2,500
(Being profit on re-issue of forfeited shares transferred to capital reserve account)
Working Notes:
During Forfeiture of equity shares:
Face value
= ₹ 10 per share
Application money
= ₹ 1 per share
Allotment money
= ₹ 2 per share
First Call money
= ₹ 3 per share
Second Call money
= ₹ 2 per share
Called up money so far
= ₹ 1 + ₹ 3 + ₹ 2 + ₹ 2
= ₹ 8 per share
During Allotment
Calls in Arrears for Amit
= 100 × ₹ 2
= ₹ 200
During First Call
Calls in Arrears for Amit
= 100 × ₹ 3
= ₹ 300
Calls in Arrears for Bimal
= 200 × ₹ 3
= ₹ 600
Total Calls in Arrears
= ₹ 300 + ₹ 600
= ₹ 900
During Second Call
Calls in Arrears for Amit
= 100 × ₹ 2
= ₹ 200
Calls in Arrears for Bimal
= 200 × ₹ 2
= ₹ 400
Calls in Arrears for Chetan
= 300 × ₹ 2
= ₹ 600
Total Calls in Arrears
= ₹ 200 + ₹ 400 + ₹ 600
= ₹ 1,200
Total calls in arrears in all phases
= ₹ 200 + ₹ 900 + ₹ 1,200
= ₹ 2,300
Total no. of shares forfeited
= 100 + 200 + 300
= 600
Called up capital on these shares
= 600 × ₹ 8
= ₹ 4,800
Forfeited amount
= ₹ 4,800 – ₹ 2,300
= ₹ 2,500
During re-issue of forfeited shares:
No. of shares re-issued
= 600
Face value
= ₹ 10 per share
Re-issue price
= ₹ 11 per share
Premium
= ₹ 11 – ₹ 10
= ₹ 1
Share Capital
= 600 × ₹ 10
= ₹ 6,000
Amount paid
= 600 × ₹ 11
= ₹ 6,600
Total Premium
= 600 × ₹ 1
= ₹ 600
22. Ajanta Company Limited having a nominal capital of ₹ 3,00,000, divided into shares of ₹ 10 each offered for public subscription of 20,000 shares payable at ₹ 2 on application; ₹ 3 on allotment and the balance in two calls of ₹ 2.50 each. Applications were received by the company for 24,000 shares. Applications for 20,000 shares were accepted in full and the shares allotted. Applications for the remaining shares were rejected and the application money was refunded. All moneys due were received with the exception of the final call on 600 shares which were forfeited after legal formalities were fulfilled. 400 shares of the forfeited shares were reissued at ₹ 9 per share.
Record necessary journal entries and prepare the balance sheet showing the amount transferred to capital reserve and the balance in share forfeiture account.
Books of Ajanta Company Limited
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
48,000
To Share Application A/c
48,000
(Being share application money received for 24,000 applications @ ₹ 2 per share)
Share Application A/c
Dr.
48,000
To Share Capital A/c
40,000
To Bank A/c
8,000
(Being share application money received on 24,000 shares, application money for 20,000 shares transferred to the share capital account and application money for 4000 shares refunded)
Share Allotment A/c
Dr.
60,000
To Share Capital A/c
60,000
(Being allotment money received due on 20,000 shares @ ₹ 3 per share)
Bank A/c
Dr.
60,000
To Share Allotment A/c
60,000
(Being share allotment money received for 20,000 shares)
Share First Call A/c
Dr.
50,000
To Share Capital A/c
50,000
(Being share first call money due on 20,000 shares @ ₹ 2.50 per share)
Bank A/c
Dr.
50,000
To Share First call A/c
50,000
(Being first call money received on 20,000 shares)
Share Second and Final Call A/c
Dr.
50,000
To Share Second and Final Call A/c
50,000
(Being share second and final call money due on 20,000 shares @ ₹ 2.50 per share)
Bank A/c
Dr.
48,500
Calls in Arrears A/c
Dr.
1,500
To Share Second and Final Call A/c
50,000
(Being share second call money received on 20,000 shares except for 600 shares)
Share Capital A/c
Dr.
6,000
To Calls in Arrears A/c
1,500
To Share Forfeiture A/c
4,500
(Being 600 shares, with face value ₹ 10 per share, forfeited on account of non-payment of second and final call money)
Bank A/c
Dr.
3,600
Share Forfeiture A/c
Dr.
400
To Share Capital A/c
4,000
(Being 400 forfeited shares of face value ₹ 10 per share re-issued at a discount price of ₹ 9 per share)
Share Forfeiture A/c
Dr.
2,600
To Capital Reserve A/c
2,600
(Being profit on re-issue of 400 forfeited shares transferred from forfeiture account to capital reserve account)
Ajanta Company Limited
Balance Sheet
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’s funds
a. Share Capital
1
1,99,500
b. Reserves and Surplus
2
2,600
2. Non-Current Liabilities
3. Current Liabilities
Total
2,02,100
II. Assets
1. Non-Current Assets
2. Current Assets
Cash and Cash Equivalents
3
2,02,100
Total
2,02,100
Note to Accounts:
Note
No.
Particulars
Amount
₹
1
Share Capital
Authorised Share Capital
30,000 shares of ₹ 10 each
3,00,000
Issued Share Capital
20,000 shares of ₹ 10 each
2,00,000
Subscribed, Called-up and Paid-up Share Capital
19,800 shares of ₹ 9 each
1,98,000
Share Forefeiture
1,500
1,99,500
2
Reserves and Surplus
Capital Reserve
2,600
3
Cash and Cash Equivalents
Cash at Bank
2,02,100
Working Notes:
During Application Phase:
Application money
= ₹ 2 per share
No. of applications received
= 24,000
No. of applications accepted
= 20,000
No. of applications rejected
= 4,000
Total application money received
= 24,000 × ₹ 2
= ₹ 48,000
Transferred to Share Capital
= 20,000 × ₹ 2
= ₹ 40,000
Application money refunded
= 4,000 × ₹ 2
= ₹ 8,000
During Share second and final call phase:
Share second and final call money
= ₹ 2.50 per share
No. of shares
= 20,000
Amount due
= 20,000 × ₹ 2.50
= ₹ 50,000
No. of shares in arrears
= 600
Calls in Arrears
= 600 × ₹ 2.50
= ₹ 1,500
Share Second and Final Call money received
= ₹ 50,000 – ₹ 1,500
= ₹ 48,500
During Forfeiture of shares:
No. of shares
= 600
Share Capital of 600 shares
= 600 × ₹ 10
= ₹ 6,000
Calls in Arrears
= ₹ 1,500
Forfeited value
= ₹ 6,000 – ₹ 1,500
= ₹ 4,500
While re-issuing forfeited shares:
No. of shares re-issued
= 400
Face value
= ₹ 10 per share
Discount value
= ₹ 9 per share
Discount
= ₹ 1 per share
Amount paid
= 400 × ₹ 9
= ₹ 3,600
Share Capital
= 400 × ₹ 10
= ₹ 4,000
Adjusted from forfeiture account
= ₹ 4,000 – ₹ 3,600
= ₹ 400
While transferring profit on re-issue of shares to Capital Reserve:
No. of forfeited shares
= 600
Forfeited value
= ₹ 4,500
Forfeited value of 400 re-issued shares
{= ₹~4,500 × \dfrac{400}{600}}
= ₹ 3,000
Adjusted to re-issued share capital
= ₹ 400
Profit transferred to capital reserve
= ₹ 3,000 – ₹ 400
= ₹ 2,600
23. Journalise the following transactions in the books Bhushan Oil Ltd.:
(a)
200 shares of ₹ 100 each issued at a premium of Rs.10 were forfeited for the non-payment of allotment money of ₹ 60 per share. The first and final call of ₹ 20 per share on these shares were not made. The forfeited shares were reissued at ₹ 70 per share as fully paid-up.
(b)
150 shares of ₹ 10 each issued at a premium of ₹ 4 per share payable with allotment were forfeited for non-payment of allotment money of ₹ 8 per share including premium. The first and final calls of ₹ 4 per share were not made. The forfeited shares were reissued at ₹ 15 per share fully paid-up.
(c)
400 shares of ₹ 50 each issued at par were forfeited for non-payment of final call of ₹ 10 per share. These shares were reissued at ₹ 45 per share fully paid-up.
Case (a)
Books of Bhusha Oil Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Share Capital A/c
Dr.
16,000
Securities Premium A/c
Dr.
2,000
To Calls In Arrears A/c
12,000
To Share Forfeiture A/c
6,000
(Being 200 shares, of face value ₹ 100 per share and ₹ 10 premium per share were fofeited due to non payment of the allotment money)
Bank A/c
Dr.
14,000
Share Forfeiture A/c
Dr.
6,000
To Share Capital A/c
20,000
(Being 200 fofeited shares of, face value ₹ 100 per share, were re-issued at a discounted price of ₹ 70 per share)
Note:

It is assumed that the premium is included in the allotment money called for. As the allotment money is not paid by the shareholder, the premium money is also not paid.

Case (b)
Books of Bhushan Oil Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Share Capital A/c
Dr.
900
Securities Premium Reserve A/c
Dr.
600
To Share Allotment A/c
1,200
To Share Forfeiture A/c
300
(Being 150 shares of at par value ₹ 10 were forfeited due to non-payment of allotment money of ₹ 8 per share which includes premium)
Bank A/c
Dr.
2,250
To Share Capital A/c
1,500
To Securities Premium Reserve A/c
750
(Being 150 shares of face value ₹ 10 each re-issued at a premium price of ₹ 15 per share fully paid-up)
Share Forfeiture A/c
Dr.
300
To Capital Reserve A/c
300
(Being all the balance of forfeited shares transferred to capital reserve account)
Case (c):
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Share Capital A/c
Dr.
20,000
To Calls in Arrears A/c
4,000
To Share Forfeiture A/c
16,000
(Being 400 shares of at par value ₹ 50 forfeited due to non-payment of final call money of ₹ 10 per share)
Bank A/c
Dr.
18,000
Share Forfeiture A/c
Dr.
2,000
To Share Capital A/c
20,000
(Being 400 forfeited shares, of face value ₹ 50 per share, re-issued at a discount price of ₹ 45 per share fully paid-up)
Share Forfeiture A/c
Dr.
14,000
To Share Forfeiture A/c
14,000
(Being balance of forfeiture account transferred to capital reserve)
Working Notes:
Case (a)
Share Price at par
= ₹ 100 per share
Premium Price at premium
= ₹ 100 + ₹ 10
= ₹ 110 per share
Allotment money (including premium)
= ₹ 60 per share
Premium
= ₹ 10
Allotment money (excluding premium)
= ₹ 60 – ₹ 10
= ₹ 50 per share
First and Final Call money
= ₹ 20 per share
Application money
= ₹ 110 – (₹ 60 + ₹ 20)
= ₹ 30 per share
No. of shares in arrears for the allotment money
= 200
Total Application money paid
= 200 × ₹ 30
= ₹ 6,000
Total Premium money not paid
= 200 × ₹ 10
= ₹ 2,000
Total Allotment money
= 200 × 60
= ₹ 12,000
Called up money so far
= ₹ 30 + ₹ 50
= ₹ 80 per share
Called up money for 200 shares
= 200 × ₹ 80
= ₹ 16,000
No. of shares re-issued
= ₹ 200
Face Value
= ₹ 100
Discount Price
= ₹ 70
Discount
= ₹ 100 – ₹ 70
= ₹ 30
Amount paid for discounted shares
= 200 × ₹ 70
= ₹ 14,000
Adjusted from forfeiture account
= 200 × ₹ 30
= ₹ 600
Case (b):
During forfeiture of shares:
Face value
= ₹ 10 per share
Premium
= ₹ 4 per share
Share price at premium
= ₹ 10 + ₹ 4
= ₹ 14 per share
Allotment money (including premium)
= ₹ 8 per share
First and final call money
= ₹ 4 per share
Application money
= ₹ 14 – (₹ 8 + ₹ 4)
= ₹ 2 per share
Call up money so far
= ₹ 2 + ₹ 8
(application + allotment money)
= ₹ 10 per share
Called up money for 150 shares
= 150 × ₹ 10
(including premium)
= ₹ 1,500
Premium money
= 150 × ₹ 4
= ₹ 600
Share capital called for 150 shares
= ₹ 1,500 – ₹ 600
= ₹ 900
Paid up money so far
= 150 × ₹ 2
= ₹ 300
∴ Forfeited amount
= ₹ 300
Calls in Arrears
= 150 × ₹ 8
= ₹ 1,200
While re-issuing shares:
At par value
= ₹ 10 per share
Premium Price
= ₹ 15 per share
Premium
= ₹ 15 – ₹ 10
= ₹ 5
Amount paid
= 150 × ₹ 15
= ₹ 2,250
Share Capital
= 150 × ₹ 10
= ₹ 1,500
Total Premium
= 150 × ₹ 5
= ₹ 750
Forfeited share amount
= ₹ 300
Transferred to Capital Reserve
= ₹ 300
Case (c):
During Forfeiture:
Face Value
= ₹ 50 per share
Final Call money
= ₹ 10 per share
Paid up money
= ₹ 50 – ₹ 10
= ₹ 40 per share
Share Capital of 400 shares
= 400 × ₹ 50
= ₹ 20,000
Calls in Arrears
= 400 × ₹ 10
= ₹ 4,000
Paid up money on 400 shares
= 400 × ₹ 40
= ₹ 16,000
During re-issue of forfeited shares:
Face Value
= ₹ 50 per share
Discount Price
= ₹ 45
Discount
= ₹ 50 – ₹ 45
= ₹ 5 per share
Amount paid by the shareholder
= 400 × ₹ 45
= ₹ 18,000
Share Capital of 400 shares
= 400 × ₹ 50
= ₹ 20,000
Adjusted from forfeiture account
= 400 × ₹ 5
= ₹ 2,000
Transfer to Capital Reserve Account:
Forfeited amount
= ₹ 16,000
Loss after discount adjusted to share capital
= ₹ 2,000
Balance transferred to capital reserve
= ₹ 16,000 – ₹ 2,000
= ₹ 14,000
24. Amisha Ltd. invited applications for 40,000 shares of Rs.100 each at a premium of ₹ 20 per share. Amount payable on application ₹ 40 ; on allotment ₹ 40 (Including premium): on first call ₹ 25 and second and final call ₹ 15.
Applications were received for 50,000 shares and allotment was made on prorata basis. Excess money on application was adjusted against the sums due on allotment.
Rohit to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited after allotment. Ashmita, who applied for 1,000 shares failed to pay the two calls and her shares were forfeited after the second call. Of the shares forfeited, 1,200 shares were sold to Kapil for Rs.85 per share as fully paid, the whole of Rohit’s shares being included.
Record necessary journal entries.
Books of Amisha Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
20,00,000
To Share Application A/c
20,00,000
(Being share application money received on 50,000 shares @ ₹ 40 per share)
Share Application A/c
Dr.
20,00,000
To Share Capital A/c
16,00,000
To Share Allotment A/c
4,00,000
(Being share application money received on 50,000 shares adjusted to capital account for 40,000 shares and the rest of application money on)
Share Allotment A/c
Dr.
16,00,000
To Share Capital A/c
8,00,000
To Share Premium A/c
8,00,000
(Being share allotment money due on 40,00,000 @ ₹ 40 per share, including ₹ 20 per share)
Bank A/c
Dr.
11,82,000
Calls in Arrears A/c
Dr.
18,000
To Allotment A/c
12,00,000
(Being allotment money due received on all the shares except for 600 shares)
Share Capital A/c
Dr.
36,000
Share Premium A/c
Dr.
12,000
To Calls in Arrears A/c
18,000
To Share Forfeiture A/c
30,000
(Being 600 shares forfeited due to non-payment of allotment money)
Share First Call A/c
Dr.
9,85,000
To Share Capital A/c
9,85,000
(Being first call money due on 39,400 shares @ ₹ 25 per share)
Bank A/c
Dr.
9,65,000
Calls in Arrears A/c
Dr.
20,000
To Share First Call A/c
9,85,000
(Being share first call money received on all shares except for 800 shares)
Share Second and Final Call A/c
Dr.
5,91,000
To Share Capital A/c
5,91,000
(Being share second and final call money due on 39,400 shares @ ₹ 15 per share)
Bank A/c
Dr.
5,79,000
Calls in Arrears A/c
Dr.
12,000
To Share Second and Final Call A/c
5,91,000
(Being share second and final call money received on all the shares except for 800 shares)
Share Capital A/c
Dr.
80,000
To Calls in Arrears A/c
32,000
To Share Forfeiture A/c
48,000
(Being 800 shares forfeited due to non-payment of the first and second and final call money)
Bank A/c
Dr.
1,02,000
Share Forfeiture A/c
Dr.
18,000
To Share Capital A/c
1,20,000
(Being 1,200 forfeited shares of face value ₹ 100 are re-issued to Kapil at a discounted price of ₹ 75 and the discount is adjusted from the share forfeiture account)
Share Forfeitre A/c
Dr.
48,000
To Capital Reserve A/c
48,000
(Being balance amount of re-issued forfeited shares transferred to capital reserve account)
Working Notes:
During Application Phase:
Application Money
= ₹ 40
No. of applications received
= 50,000
Total application money
= 50,000 × ₹ 40
= ₹ 20,00,000
No. of shares issued
= 40,000
Application money
= 40,000 × ₹ 40
(adjusted to Share Capital)
= ₹ 16,00,000
Application money
= ₹ 20,00,000 – ₹ 16,00,000
(adjusted to Allotment account)
= ₹ 4,00,000
During allotment phase:
Allotment money
= ₹ 40 per share
Allotment money due
= 40,000 × ₹ 40
= ₹ 16,00,000
Premium
= ₹ 20
Allotment Money
= 40,000 × ₹ 20
(to be adjusted to share premium reserve)
= ₹ 8,00,000
Allotment Money
= ₹ 16,00,000 – ₹ 8,00,000
(to be adjusted to share capital)
= ₹ 8,00,000
Adjusted from application money
= ₹ 4,00,000
Allotment money still due
= ₹ 16,00,000 – ₹ 4,00,000
= ₹ 12,00,000
Shares in arrears for allotment money
= 600
Allotment money defaulted
{= \text{Total Money due} × \dfrac{\text{No. of shares defaulted}}{\text{Total No. of shares}}}
{= ₹~12,00,000 × \dfrac{600}{40,000}}
= ₹ 18,000
Allotment money collected
= ₹ 12,00,000 – ₹ 18,000
= ₹ 11,82,000
During Share Forfeture:
Application money
= ₹ 40 per share
Allotment money (including premium)
= 40 per share
Total Call money
= ₹ 40 + ₹ 40
= ₹ 80 per share
No. of shares alloted to Rohit
= 600
Total called money on Rohit’s shares
= 600 × ₹ 80
= ₹ 48,000
Premium
= ₹ 20 per share
Premium money called on Rohit’s shares
= 600 × ₹ 20
= ₹ 12,000
Share Capital called on 600 shares
= ₹ 48,000 – ₹ 12,000
= ₹ 36,000
Calls in Arrears
= ₹ 18,000
Amount forfeited
= ₹ 48,000 – ₹ 18,000
= ₹ 30,000
During Share First Call:
First call money
= ₹ 25 per share
No. of shares
= 40,000 – 600
(on which first call was made)
= 39,400
Amount due
= 39,400 × ₹ 25
= ₹ 9,85,000
No. of shares applied by Asmita
= 1,000
No. of shares alloted to Asmita
{= \text{No. of shares issued} × \dfrac{\text{No. shares applied}}{\text{Total no. of shares}}}
(on pro-rata)
{= 40,000 × \dfrac{1000}{50,000}}
= 800
∴ No. of shares in arrears
= 800
Calls in Arrears
= 800 × ₹ 25
= ₹ 20,000
Total Share call money collected
= ₹ 9,85,000 – ₹ 20,000
= ₹ 9,65,000
During share second and final call:
Second and Final Call money
= ₹ 15
No. of shares
= 39,400
Total second and final call money due
= 39,400 × ₹ 15
= 5,91,000
No. shares in arrears
= 800
Share second and final call money in arrears
= 800 × ₹ 15
= 12,000
Share second and final call money paid
= ₹ 5,91,00 – ₹ 12,000
= 5,79,000
During forfeiture of Ashmita’s shares:
Calls in Arrears during share first call
= ₹ 20,000
Calls in Arrears during share second and final call
= ₹ 12,000
Total Calls in Arrears
= ₹ 20,000 + ₹ 12,000
= ₹ 32,000
Share Capital amount
= 800 × ₹ 100
= ₹ 80,000
Amount paid so far
= ₹ 80,000 – ₹ 32,000
= ₹ 48,000
While re-issing the shares:
Face Value
= ₹ 100 per share
Discount Price
= ₹ 85 per share
Discount
= ₹ 100 – ₹ 85
= ₹ 15 per share
No. share re-issued to Kapil
= 1,200
Amount paid by Kapil
= 1,200 × ₹ 85
= 1,02,000
No. of Rohit’s shares re-issued
= 600
Disount adjusted
= 600 × ₹ 15
(from Rohit’s forfeited amount)
= ₹ 9,000
No. of Ashmita’s shares reissued
= 1,200 – 600
= ₹ 600
Disount adjusted
= 600 × ₹ 15
(from Ashmita’s forfeited amount)
= ₹ 9,000
Total discount adjusted
= ₹ 9,000 + ₹ 9,000
= ₹ 18,000
Rohit’s forfeited amount
= ₹ 30,000
Amount transferred to capital reserve
= ₹ 30,000 – ₹ 9,000
= ₹ 21,000
Ashmita’s forfeited amount for 800 shares
= ₹ 48,000
Ashmita’s forfeited amount for 600 shares
{= ₹~48,000 × \dfrac{600}{800}}
= ₹ 36,000
Amount transferred to Capital Reserve
= ₹ 36,000 – ₹ 9,000
= ₹ 27,000
Total amount transferred to capital reserve
= ₹ 21,000 + ₹ 27,000
= ₹ 48,000