Question

D Ltd. offered to the public 20,000 shares of ₹100 each at a premium of ₹20 per share payable as follows:

	₹
On Application	30
On Allotment	40 (including premium)
On First Call	25, and
On Final Call	25

Applications were received for 26,000 shares out of which those for 1,000 shares were rejected outright; full allotment was made to the applicants for 5,000 shares and pro-rata allotment was made to balance.
Final Call was not made and a shareholder holding 600 shares to whom allotment was made on pro-rat a basis failed to pay the allotment and first call money. His shares were forfeited. Out of these, 500 shares were re-issued at ₹70 per share as ₹75 paid-up.
Prepare Cash Book, Journal entries and the Balance Sheet of the company.

Answer 1

Cash Book (Bank Column)
Particulars	Amount (₹)	Particulars	Amount (₹)
To Share Application	7,80,000	By Refund of Application	30,000
To Share Allotment	2,00,000
To Share First Call	4,75,000
To Reissue of Forfeited Shares	35,000
Total	14,90,000	Total	30,000

 

Journal entries In the books of D Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		7,80,000
	To Share Application A/c			7,80,000
	(Being application money received on 26,000 shares @ ₹30)
2.	Share Application A/c     ...Dr.		7,80,000
	To Share Capital A/c (20,000 × ₹30)			6,00,000
	To Bank A/c (Refund 1,000 × ₹30)			30,000
	To Share Allotment A/c (Adjustment)			1,50,000
	(Being application money allocated, refund, and balance adjusted)
3.	Share Allotment A/c     ...Dr.		8,00,000
	To Share Capital A/c (20,000 × ₹20)			4,00,000
	To Securities Premium Reserve A/c (20,000 × ₹20)			4,00,000
	(Being allotment due with premium)
4.	Bank A/c     ...Dr.		6,50,000
	To Share Allotment A/c			6,50,000
	(Being allotment money received excluding 600 shares)
5.	Share First Call A/c     ...Dr.		5,00,000
	To Share Capital A/c			5,00,000
	(Being first call due)
6.	Bank A/c     ...Dr.		4,85,000
	To Share First Call A/c			4,85,000
	(Being first call received except from 600 shares)
7.	Share Capital A/c     ...Dr.		60,000
	Securities Premium Reserve A/c     ...Dr.		12,000
	To Share Allotment A/c			24,000
	To Share First Call A/c			15,000
	To Share Forfeiture A/c			33,000
8.	Bank A/c     ...Dr.		35,000
	Share Forfeiture A/c			2,500
	To Share Capital A/c (500 × ₹75)			37,500
	(Being 500 forfeited shares reissued at ₹70 as ₹75 paid-up)
9.	Share Forfeiture A/c     ...Dr.		12,500
	To Capital Reserve A/c			12,500
	(Being transfer to Capital Reserve)

 

Balance Sheet of D Ltd.
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Share Capital:			Bank Balance		19,02,000
Authorised & Issued:			Less: Prelim expenses/adjustments		36,500
20,000 shares of ₹100 =	20,00,000
Called up: ₹30 (App) + ₹20 (Allot) + ₹25 (1st call) = ₹75 × 20,000 =	15,00,000
Less: Calls in arrears (600 × ₹65)	(₹39,000)	14,61,000
Capital Reserve		12,500
Securities Premium Reserve		3,88,000
Share Forfeiture A/c (Bal.)		4,000
Total		18,65,500	Total		18,65,500