Question

Concept Stationary Ltd. invited applications for issuing 3,00,000 shares of ₹ 10 each at a premium of ₹ 3 per share. The amounts were payable as follows:
On application and allotment – ₹ 7 per share.
On first & final call – balance (including a premium of ₹ 3)
Applications were received for 4,00,000 shares & allotment was made as follows:
(i) To applicants for 80,000 shares – 80,000 shares.
(ii) To applicants for 40,000 shares – nil
(iii) The balance of the applicants were allotted shares on a pro-rata basis.

Excess money received with applications was adjusted towards sums due on the first and final call.
Amit, who belonged to category (i) and was allotted 4,000 shares and Veni, who belonged to category (iii) and was allotted 4,400 shares failed to pay the first and final call money. Their shares were forfeited. The forfeited shares were re-issued at ₹ 7 per share fully paid-up.

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

Answer 1

In the books of Concept Stationary Ltd. 
Journal  

Date	Particulars		L.F.	Debit Amount(₹)	Credit Amount(₹)
	Bank A/c	Dr.		28,00,000
	To Share Application & Allotment A/c				28,00,000
	(Received application money & allotment on 4,00,000 shares)
	Share Application & Allotment A/c	Dr.		28,00,000
	To Share Capital A/c				21,00,000
	To Share First Call A/c				4,20,000
	To Bank A/c				2,80,000
	(Transfer of application & allotment money to Share Capital)
	Share First and Final Call A/c	Dr.		18,00,000
	To Share Capital A/c				9,00,000
	To Security Premium Reserve A/c				9,00,000
	(Call money due on 3,00,000 shares)
	Bank A/c	Dr.		13,38,000
	Calls-in-Arrears A/c (18,000 + 24,000)	Dr.		42,000
	To Share First and Final Call A/c				13,80,000
	(Received call money)
	Share Capital A/c (8,400 x 10)	Dr.		84,000
	Security Premium Reserve A/c (8,400 x 3)	Dr.		25,200
	To Calls in Arrears A/c (18,000 + 24,000)				42,000
	To Share Forfeiture A/c				67,200
	(Forfeiture of 8400 shares for non-payment of call money)
	Bank A/c (8,400 x 7)	Dr.		58,800
	Share Forfeiture A/c	Dr.		25,200
	To Share Capital A/c				84,000
	(Reissue of 8,400 shares at ₹7 per share)
	Share Forfeiture A/c	Dr.		42,000
	To Capital Reserve A/c				42,000
	(Profit on re-issue transferred to Capital Reserve Account)

Working Notes

(1) Computation Table

Categories	Shares  Applied	Shares Allotted	Money received on Application &Allotment  @ ₹ 7 each	Money transferred to Share Capital @ ₹ 7 each	Excess Application &Allotment money	Amount adjusted on First call	Amount to be refunded
I	80,000	80,000	5,60,000	5,60,000
II	40,000	Nil	2,80,000				2,80,000
III	2,80,000	2,20,000	19,60,000	15,40,000	4,20,000	4,20,000
	4,00,000	3,00,000	28,00,000	21,00,000	4,20,000	4,20,000	2,80,000

(2) Calculation of Shares applied to Amit: 4000 shares

Calls in arrears = 4,000 x ₹ 6 = ₹ 24,000

3) Calculation of Shares applied to Veni:

Shares applied by Veni = `(2,80,000)/(2,20,000) xx 4400 = 5600  "shares"`

Amount unpaid by Veni
Amount received on application (5600 × 7)	39,200
Less: actual transferred to share capital (4400 × 7)	30,800
Excess	8,400
Amount due on first call (4400 x 6)	26,400
Less: excess adjusted	(8,400)
Calls in arrears	18,000