Question

A Co. Ltd. offered to the public 20,000 equity shares of ₹100 each at a premium of ₹10 per share. The payment was to be as follows:

On Application	₹30 per share
On Allotment	₹30 per share (including premium)
On First Call	₹25 per share
On Second & Final Call	₹25 per share

Applications were received for 35,000 shares. Applications for 10,000 shares were rejected. Applicants for 15,000 shares were allotted 10,000 shares and remaining applications were accepted in full. The Directors made both the calls. One shareholder holding 500 shares failed to pay the two calls and as a consequence his shares were forfeited. 200 of these shares were re-issued as fully paid at ₹80 per share.
Expenses of issue came to ₹10,000.

Prepare Cash Book, the Journal and the Balance Sheet on the basis of information given above.

Answer 1

Dr.	Cash Book				Cr.
Date	Particulars	Amt. (₹)	Date	Particulars	Amt. (₹)
	To Share Application A/c (20,000 × 30 + 5,000 × 30)	7,50,000		By Bank (Issue Expenses)	10,000
	To Share Allotment A/c	6,00,000
	To Share First Call A/c	4,87,500
	To Share Second & Final Call A/c	4,87,500
	To Bank (Reissue of 200 Shares)	16,000		By Balance c/d	21,81,000
		23,41,000			23,41,000

 

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		7,50,000
	To Share Application A/c			7,50,000
	(Being application money received)
2.	Share Application A/c     ...Dr.		7,50,000
	To Share Capital A/c (20,000 × ₹30)			6,00,000
	To Bank A/c (Refund 10,000 × ₹30)			3,00,000
	To Share Allotment A/c (5,000 × ₹30)			1,50,000
	(Application adjusted, allotment and refund)
3.	Share Allotment A/c     ...Dr.		6,00,000
	To Share Capital A/c (20,000 × ₹20)			4,00,000
	To Securities Premium A/c (20,000 × ₹10)			2,00,000
	(Being allotment due on 20,000 shares including ₹10 premium)
4.	Bank A/c     ...Dr.		6,00,000
	To Share Allotment A/c			6,00,000
	(Being allotment money received in full)
5.	Share First Call A/c     ...Dr.		5,00,000
	To Share Capital A/c			5,00,000
	(Being first call of ₹25 per share made on 20,000 shares)
6.	Bank A/c     ...Dr.		4,87,500
	Calls in Arrears A/c     ...Dr.		12,500
	To Share First Call A/c			5,00,000
	(Being first call money received except on 500 shares)
7.	Share Second & Final Call A/c     ...Dr.		5,00,000
	To Share Capital A/c			5,00,000
	(Being second and final call of ₹25 per share made on 20,000 shares)
8.	Bank A/c     ...Dr.		4,87,500
	Calls in Arrears A/c     ...Dr.		12,500
	To Share Second & Final Call A/c			5,00,000
	(Being final call money received except on 500 shares)
9.	Share Capital A/c     ...Dr.		50,000
	To Calls in Arrears A/c			25,000
	To Share Forfeiture A/c			25,000
	(Being 500 shares forfeited for non-payment of both calls @ ₹25 each)
10.	Bank A/c     ...Dr.		16,000
	Share Forfeiture A/c     ...Dr.		4,000
	To Share Capital A/c			20,000
	(Being 200 of forfeited shares reissued at ₹80 each as fully paid up)
11.	Share Forfeiture A/c     ...Dr.		6,000
	To Capital Reserve A/c			6,000
	(Being gain on reissue of forfeited shares transferred to capital reserve)
12.	Securities Premium A/c     ...Dr.		10,000
	To Share Issue Expenses A/c			10,000
	(Being share issue expenses adjusted against securities premium)

 

Balance Sheet of A Co. Ltd.
Liabilities	Amt. (₹)	Assets	Amt. (₹)
Share Capital	20,00,000	Cash and Bank Balances	21,81,000
Reserves and Surplus:
Securities Premium Reserve	1,90,000
Share Forfeiture A/c	15,000
Capital Reserve	6,000
Total	21,81,000	Total	21,81,000