Question

AB Ltd. invited applications for issuing 75,000 equity shares of Rs.100 each at a premium of Rs.30 per share. The amount was payable as follows:

On Application and Allotment - Rs.85 per share (including premium)

On First and Final call - the balance amount

Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and shares were allotted on pro-rata basis to the remaining applicants. Excess money received on application and allotment was adjusted towards sums due to first and final call. The calls were made. A shareholder, who applied for 1,000 shares, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs.150 per share fully paid up.

Pass necessary journal entries for the above transactions in the books of AB Ltd.

Answer 1

                                                                                                  Journal Entries

Date	Particulars	L.F.	Debit (Rs.)	Credit (Rs.)
	Bank A/c            Dr.       To Share Application and Allotment A/c (Being share application and allotment received on 1,27,500 of Rs 85 each including Premium of Rs 30 each )		1,08,37,500	1,08,37,500
	Share Application and Allotment A/c      Dr.       To Share Capital A/c       To Securities Premium A/c       To Bank A/c       To Share First and Final Call A/c (Being share application of 75,000 shares transferred to share capital, share application and allotment on 27,500 shares refunded and rest is adjusted on share first and final call)		1,08,37,500	41,25,000 22,50,000 23,37,500 21,25,000
	Share First and Final Call A/c     Dr.       To Share Capital A/c (Being share first call due on 75,000 shares of Rs 45 each)		33,75,000	33,75,000
	Bank A/c        Dr.      To Share First and Final Call A/c (Being share first and final call received)		12,37,500	12,37,500
	Share Capital A/c        Dr.     To Share Forfeiture A/c     To Share First and Final Call A/c (Being 750 share, were forfeiture for non- payment of share first and final call of Rs 45 each)		75,000	62,500 12,500
	Bank A/c           Dr.      To Share Capital A/c      To Securities Premium A/c Being 750 forfeited share were re-issued at Rs 150 each fully paid up)		1,12,500	75,000 37,500
	Share Forfeiture A/c      Dr.     To Capital Reserve A/c (Being share forfeiture transferred to capital reserve)		62,5000	62,500

 

Category	Share Applied	Share Allotted	Money received on App. and Allot. @ Rs.85 each including premium of Rs.30 each	Money transfers to share capital @ Rs.85 each including premium of Rs.30 each	Money transfer to securities premium @ Rs.30 each	Excess Application and Allotment money	Share first and final call due @ Rs.45 each	Amount receivable on share first and final call after adjustment	Money Refunded
I	27,500	Nil	23,37,500						23,37,500
II	1,00,000	75,000	85,00,000	41,25,000	22,50,000	21,25,000	33,75,000	12,50,000	-
	1,27,500	75,000	7,08,37,500	41,25,000	22,50,000	21,25,000	33,75,000	12,50,000	23,37,500

 

Those who applied for 1,00,000 share allotted =75,000 share.

Those who applied for 1,000 share, alloted = 75,000 x (1000/100000) = 750 shares

Share Application and Allotment received on 1,000 shares of Rs.85 each (including premium of Rs.30 each) = Rs.85,000

Shares Allotted (750 × 85) = Rs.63,750

Excess Application and Allotment money received = Rs.21,250

Share First and Final Call due on 750 shares of Rs.45 each = Rs.33,750

Excess Application and Allotment money received = Rs.21,250

Share First and Final Call not received = Rs.12,500 (33,750 – 21,250)

Therefore, Share First and final Call received = Rs.12,37,500 (12,50,000 – 12,500)