Question

'Guru Limited' invited applications for issuing 80,000 equity shares of Rs 10 each at a premium of Rs 10 per share. The amount was payable as follows:
On application and allotment - Rs 10 (including Rs 5 premium)
On first and final call - Rs 10 (including Rs 5 premium)
Applications for 1,00,000 share were received. Applications for 10,000 shares were rejected and
application money was refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess application money received from applicants to whom shares were allotted on pro-rata basis was adjusted towards sums due on first and final call. All calls were made and were duly received except the first and final call money from Kumar who had applied for 1,800 shares. His shares were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass necessary journal entries for the above transactions in the books of 'Guru Limited'.

Answer 1

In the books of Guru Ltd. Journal Entry
Date	Particulars	L.F.	Dr. Rs	Cr. Rs
	Bank A/c    Dr.    To Equity Share Application and Allotment A/c (Being amount received on an application for 1,00,000 shares))		10,00,000	10,00,000
	Equity Share Application and Allotment A/c   Dr.     To Equity Share Capital A/c     To Securities Premium A/c     To Equity Share First and Final Call A/c     To Bank A/c (Being amount of application transferred to Share Capital account and excess money is adjusted in first and final call account)		10,00,000	4,00,000 4,00,000 1,00,000 1,00,000
	Equity Share First and Final Call A/c     Dr.     To Equity Share Capital A/c     To Securities Premium A/c (Being amount due on first and final call)		8,00,000	4,00,000 4,00,000
	Bank A/c (8,00,000 – 1,00,000 – 14,000)   Dr     To Equity Share First and Final Call A/c. (Being amount received on share First and Final Call)		6,86,000	6,86,000
	Equity Share Capital A/c   Dr Securities Premium A/c    Dr.     To Equity Share Forfeiture A/c    To Equity Share First and Final Call A/c (Being Kumar’s shares were forfeited)		16,000 8,000	10,000 14,000
	Bank A/c     Dr. Equity Share Forfeiture A/c    Dr.    To Equity Share Capital A/c (Being forfeited shares were reissued for Rs.9 as fully paid up)		14,400 1,600	16,000
	Equity Share Forfeiture A/c   Dr.     To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital reserve)		8,400	8,400

Working Notes:

Categories	Applied Shares	Shares Allotted	Received on Application n @ Rs 10 each	transferred d to Share Capital @ Rs 5 each	transferred to Securities Premium @ Rs 5 each	Application on money	Final Call due @ 10 (5+5) each	Receivable on first and final call after Adjusted	refunded
1	10,000	-	1,00,000	-	-	-	-	-	1,00,000
2	90,000	80,000	9,00,000	4,00,000	4,00,000	1,00,000	8,00,000 (4,00,000 + 4,00,000)	7,00,000
	1,00,000	80,000	10,00,000	4,00,000	4,00,000	1,00,000	8,00,000	7,00,000	1,00,000

WN 2: Calculation of Amount not received on First and Final Call

Shares alloted to Kumar = `80000/90000 xx 1800 = 1600` shares

Amount received on 1,800 shares @ Rs 10 each = Rs 18,000
Amount transferred to Share Capital A/c (1,600 x 5) = 8,000
Amount transferred to Securities Premium A/c (1,600 x 5) = 8,000
Excess money received on application = 2,000
Amount due on First and Final Call @ Rs 10 each = 16,000 (8,000 + 8,000)
Amount not received on Securities Premium = 8,000
Amount not received on first and final call = 6,000 (8,000 – 2,000)

WN 3: Calculation of amount credited in Share Forfeiture Account

Amount received on Application and Allotment = Rs 18,000 = 18000

Less : Amount received for Securities Premium = `8000(1600 xx 5)`

Amount to be credited in Share Forfeiture Account = 10000