Question

Ajanta Company Limited having a normal capital of Rs 3,00,000, divided into shares of Rs 10 each offered for public subscription of 20,000 shares payable at Rs 2 on application; Rs 3 on allotment and the balance in two calls of Rs 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 Rs 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.

Answer 1

Journal Entries in the books of Ajanta Company Limited
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		48,000	-
	To Share Application A/c		-	48,000
	(Share Application money received for  24,000 shares @ Rs 2 per share)
2.	Share Application A/c   ...Dr.		48,000	-
	To Share Capital A/c		-	40,000
	To Bank A/c		-	8,000
	(Share Application @ Rs 2 per share for 20,000 shares  transferred to Share Capital, and the remaining 4,000 shares rejected)
3.	Share Allotment A/c   ...Dr.		60,000	-
	To Share Capital A/c		-	60,000
	(Share Allotment money due @ Rs 3 per share on 20,000 shares)
4.	Bank A/c   ...Dr.		60,000	-
	To Share Allotment A/c		-	60,000
	(Share Allotment money received for 20,000 shares  @ Rs 3 per share)
5.	Share First Call A/c   ...Dr.		50,000	-
	To  Share Capital A/c		-	50,000
	(Share First Call money due on 20,000 Shares @ Rs 2.5 per share)
6.	Bank A/c   ...Dr.		50,000	-
	To Share First Call A/c		-	50,000
	(Share First Call money received for 20,000 shares @ Rs 2.5 per share)
7.	Share Final Call A/c   ...Dr.		50,000	-
	To Share Capital A/c		-	50,000
	(Share Final Call money due on 20,000 Shares @ Rs 2.5 per share)
8.	Bank A/c   ...Dr.		48,500	-
	Calls in Arrears A/c   ...Dr.		1,500	-
	To Share Final Call A/c		-	50,000
	(Share Final Call money received for 19,400 shares @ Rs 2.5 per share, except 600 shares)
9.	Share Capital A/c   ...Dr.		6,000	-
	To Calls in Arrears A/c		-	1,500
	To Share Forfeiture A/c		-	4,500
	(600 Shares forfeited @ Rs 10 each for the non-payment of Share Final Call @  Rs 2.5 per share)
10.	Bank A/c   ...Dr.		3,600	-
	Share Forfeiture A/c   ...Dr.		400	-
	To Share Capital A/c		-	4,000
	(400 shares @ Rs 10 each for Rs 9 per share reissued)
11.	Share Forfeiture Account   ...Dr.		2,600	-
	To Capital Reserve A/c		-	2,600
	(After reissue, balance of 400 shares in Forfeiture Account transferred to Capital Reserve Account)

 

Balance Sheet (Extract)
Particulars	Note no.	Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,500
b. Reserves and Surplus	2	2,600
Total		2,02,100
II Assets
1. Cash and cash equivalents		2,02,100
Total		2,02,100

Notes to Accounts:

Note No.	Particulars	Amount (₹)	Amount (₹)
1.	Share Capital
	Authorised Capital
	30,000 shares of Rs 10 each		3,00,000
	Issued Share Capital
	20,000 shares of Rs 10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,800 shares of Rs 10 each	1,98,000	1,99,500
	Add: Shares Forfeiture	1,500
2.	Reserves and Surplus
	Capital Reserve		2,600
3.	Cash and Cash Equivalents
	Cash at Bank		2,02,100

Working Note:

Capital Reserve:

Particulars	Amount (₹)
Credit balance in share forfeiture for (400 × ₹ 7.5)	3,000
Less: Debit balance of share forfeiture (400 × ₹ 1)	400
Amount to be transferred to capital reserve	2,600