Question

A Ltd. invited applications for issuing 1,00,000 shares of Rs 10 each at a premium of Rs 1 per share. The amount was payable as follows:

On Application: Rs 3 per share

On Allotment: Rs 3 per share (including premium)

On First Call: Rs 3 per share

On Second and Final Call: Balance amount

Applications for 1,60,000 shares were received. The allotment was made on the following basis:
(i) To applicants for 90,000 shares: 40,000 shares

(ii) To applicants for 50,000 shares: 40,000 shares

(iii) To applicants for 20,000 shares: full shares

Excess money paid on the application is to be adjusted against the amount due on allotment and calls. Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money.

Another shareholder, Sudha, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money.

All the shares of Rishabh and Sudha were forfeited and were subsequently re-issued at Rs 7 per share fully paid. Pass the necessary journal entries in the books of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required

Answer 1

In the books of A Ltd. Journal
Date	Particulars	L.F	Dr. Rs	Cr. Rs
1	Bank A/c    Dr    To Equity Share Application A/c (Being application money received on 1,60,000 shares)		4,80,000	4,80,000
2	Equity Share Application A/c   Dr.   To Equity Share Capital A/c   To Equity Share Allotment A/c   To Calls in Advance A/c (Being application money received transferred to Share Capital, to be adjusted on allotment and calls)		4,80,000	3,00,000 1,50,000 30,000
3	Equity Share Allotment A/c (3x1,00,000)   Dr   To Equity Share Capital A/c (2x1,00,000)   To Securities Premium Reserve A/c (1x1,00,000) (Being allotment made due on 1,00,000 shares)		3,00,000	2,00,000 1,00,000
4	Bank A/c      Dr. Calls in Arrears A/c (WN1)     Dr.    To Equity Share Allotment A/c (3x50,000) (Being allotment money received except 1,200 shares of Rishabh)		1,47,300 2,700	1,50,000
5	Equity Share First Call A/c (3x1,00,000)     Dr    To Equity Share Capital A/c (3x1,00,000) (Being share first call money due on 1,00,000 shares)		3,00,000	3,00,000
6	Bank A/c           Dr Calls in Advance A/c      Dr. Calls in Arrears A/c (WN)    Dr.     To Equity Share First Call A/c (Being first call money received)		2,64,600 30,000 5,400	3,00,000
7	Equity Share Second and Final Call A/c (2x1,00,000)   Dr   To Equity Share Capital A/c (Being share second and final call money due on 1,00,000 shares)		2,00,000	2,00,000
8	Bank A/c              Dr Calls in Arrears A/c(2x2,000)   Dr     To Equity Share Second and Final Call A/c (Being share second and final Call money received)		1,96,000 4,000	2,00,000
9	Share Capital A/c (2,000x10)       Dr Securities Premium Reserve A/c (1x1,200)   Dr     To Calls in Arrears A/c (2,700 + 5,400 + 4,000)     To Share Forfeiture A/c (Being 2000 shares of Rishabh and Sudha forfeited due to non-payment of allotment and call money)		20,000 1,200	12,100 9,100
10	Bank A/c (7x2,000)     Dr Share Forfeiture A/c    Dr    To Share Capital A/c (10x2000) (Being 2000 forfeited shares of Rishabh and Sudha reissued as fully paid-up)		14,000 6,000	20,000
11	Share Forfeiture A/c (9,100 – 6,000)    Dr.    To Capital Reserve A/c (Being amount forfeited transferred to Capital Reserve)		3,100	3,100

 

Working Note:

Note No	Particulars	Amount (Rs)
1	Amount not paid by Rishabh (Calls in Arrears) Allotment Due on Rishabh's Shares (3x1,200) Less: Excess on Application 3x(1500-1200)   #No. of Shares allotted to Rishabh = 1,50040,000/50,000 =1,200	3,600 900 2,700
2	Amount not paid in respect of First Call (Calls in Arrears) First call Due (32000)-i.e. on 800 and 1,200 shares Less: Excess on Application on Sudha's Shares 3x(1800- 800)-2,400 i.e. adjusted on the allotment	6,000 600
		5,400

 

Pro Rata Table
Shares Applied for Rs 3		Shares Allotted Rs 3		Allotment Rs 3	First Call Rs 3	Second & Final Call Rs 3	Refund
Units	Rs	Units	Rs	Rs	Rs	Rs	Rs
90,000 50,000 20,000	2,70,000 1,50,000 60,000	40,000 40,000 20,000	1,20,000 1,20,000 60,000	1,20,000 30,000 -	30,000 - -	- - -	Nil Nil Nil
1,60,000	4,80,000	1,00,000	3,00,000	1,50,000	30,000