Question

EF Ltd. invited applications for issuing 80,000 equity shares of  ₹ 50 each at a premium of 20%. The amount was payable as follows:
On Application: ₹ 20 per share (including premium ₹ 5)    
On Allotment: ₹ 15 per share (including premium ₹ 5)
On First Call: ₹ 15 per share
On Second and Final call: Balance amount
Applications for 1,20,000 shares were received. Applications for 20,000 shares were rejected and pro-rata allotment was made to the remaining applicants.
Seema, holding 4,000 shares failed to pay the allotment money. Afterward, the first call was made. Seema paid allotment money along with the first call. Sahaj who had applied for 2,500 shares failed to pay the first call money. Sahaj's shares were forfeited and subsequently reissued to Geeta for ₹ 60 per share, ₹ 50 per share paid up. Final call was not made. Pass necessary journal entries for the above transactions in the books of EF Ltd. by opening a calls-in-arrears account.

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount(₹)	Credit Amount(₹)
	Bank A/c	Dr.		24,00,000
	To Share Application A/c				24,00,000
	(Being Application money received on 1,20,000 shares)
	Share Application A/c	Dr.		24,00,000
	To Share Capital A/c (80,000 × 15)				12,00,000
	To Securities Premium A/c (80,000 × 5)				4,00,000
	To Share Allotment A/c				4,00,000
	To Bank A/c				4,00,000
	(Being application money adjusted and excess money on 20,000 shares refunded)
	Share Allotment A/c	Dr.		12,00,000
	To Share Capital A/c				8,00,000
	To Securities Premium A/c				4,00,000
	(Being allotment due on 80,000 shares)
	Bank A/c	Dr.		7,60,000
	Calls–in–Arrears A/c (4000 × 15 – 20,000)	Dr.		40,000
	To Share Allotment A/c				8,00,000
	(Being Allotment money received and excess money on application adjusted)
	Share First Call A/c	Dr.		12,00,000
	To Share Capital A/c				12,00,000
	(Being call money due)
	Bank A/c	Dr.		11,70,000
	Calls–in–Arrears A/c (2000 × 15)	Dr.		30,000
	To Share First Call A/c				12,00,000
	(Being first call money received)
	Bank A/c	Dr.		40,000
	To Call–in–Arrears A/c				40,000
	(Being allotment money received on 4,000 shares)
	Share Capital A/c (2,000 × 40)	Dr.		80,000
	To Share Forfeiture A/c (2000 × 25)				50,000
	To Calls–in–Arrears A/c				30,000
	(Being Sahaj’s share forfeited)
	Bank A/c	Dr.		1,20,000
	To Share Capital A/c				1,00,000
	To Securities Premium A/c				20,000
	(Being Sahaj’s shares reissued for ₹  60 per share and (₹) 50 paid up)
	Share Forfeiture A/c	Dr.		50,000
	To Capital Reserve A/c				50,000
	(Being amount transferred on shares reissued)

 

Computation Table

Categories	Shares Applied	Shares Allotted	Money received on Application @ (₹) 20	Money Transferred to Share Capital @ (₹) 15	Money Transferred to Securities Premium @ (₹) 5	Allotment due @ (₹) 15	Excess on Application	Refund
I	20,000	Nil	4,00,000	-	-	-	-	4,00,000
II	1,00,000	80,000	20,00,000	12,00,000	4,00,000	12,00,000	4,00,000	-
	1,20,000	80,000	24,00,000	12,00,000	4,00,000	12,00,000	4,00,000	4,00,000

 

	Shares Allotted	Shares Applied	Excess on Application
Seema’s Shares (Category II)	4,000	5,000 ( 4,000 × 1,00,000/80,000)	20,000
Sahaj’s Shares (Category II)	2,000 (2,500 × 80,000/1,00,000)	2,500	-