Question

Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under:

With Application	Rs. 3 per share
On allotment (including premium)	Rs. 5 per share
On First call	Rs. 2 per share
On Second and Final call	Rs. 2 per share

Applications were received for 1,60,000 shares. Allotment was made on a pro-rata basis. Excess money on the application was adjusted against the amount due on allotment.

Rohan, for whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs 7 per share.

Record journal entries in the books of the company to record these transactions relating to share capital. Also, show the company’s balance sheet.

Answer 1

Books of Himalaya Company Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		4,80,000	-
	To Share Application A/c		-	4,80,000
	(Share Application money received for 1,60,000 shares @ Rs 3 per share)
2.	Share Application A/c  ...Dr.		4,80,000	-
	To Equity Share Capital A/c		-	3,60,000
	To Share Allotment A/c		-	1,20,000
	(Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and the remaining amount adjusted to Allotment)
3.	Share Allotment A/c   ...Dr.		6,00,000	-
	To Equity Share Capital A/c		-	3,60,000
	To Securities Premium		-	2,40,000
	(Share Allotment due on 1,20,000 shares @ Rs 5 per share, including Rs 2 Securities Premium)
4.	Bank A/c   Dr.		4,80,000	-
	To Share Allotment A/c		-	4,80,000
	(Share allotment for 1,20,000 shares @ Rs 5 per share received)
5.	Share First Call A/c   ...Dr.		2,40,000	-
	To Equity Share Capital A/c		-	2,40,000
	(Share First Call due on 1,20,000 shares @ Rs 2 per share)
6.	Bank A/c   ...Dr.		2,30,400	-
	To Share First Call A/c		-	2,30,400
	(Share First Call received on 1,15,200 shares @ Rs 2 per share, and 4,800 shares failed to pay)
7.	Share Final Call A/c   ...Dr.		2,40,000	-
	To Equity Share Capital A/c		-	2,40,000
	(Share Final call due on 1,20,000 shares @ Rs 2 per share)
8.	Bank A/c   ...Dr.		2,30,400	-
	To Share Final Call A/c		-	2,30,400
	(Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)
9.	Equity Share Capital A/c (4,800 × 10)   ...Dr.		48,000	-
	To  Share First Call A/c (4,800 × 2)		-	9,600
	To  Share Final Call A/c (4,800 × 2)		-	9,600
	To  Share Forfeiture A/c (4,800 × 6)		-	28,800
	(4,800 shares forfeited for the non-payment of First Call and Final Call)
10.	Bank A/c   ...Dr.		33,600	-
	Share Forfeiture A/c   ...Dr.		14,400	-
	To  Equity Share Capital A/c		-	48,000
	(4,800 shares reissued @ Rs 7 per share, fully paid-up)
11.	Share Forfeiture A/c   ...Dr.		14,400	-
	To Capital Reserve A/c		-	14,400
	(Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)

 

Himalaya Company Limited Balance Sheet
Particulars	Note No.	(₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	12,00,000
b. Reserves and Surplus	2	2,54,400
2. Non-Current Liabilities
3. Current Liabilities
Total		14,54,400
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	14,54,400
		14,54,400

Notes To Accounts:

Particulars	Amount (₹)	Amount (₹)
1. Share Capital
Authorised Capital
……. shares of ₹ 10 each
Issued Capital:
1,20,000 shares of ₹ 10 each		12,00,000
Subscribed Capital
1,20,000 shares of ₹ 10 each		12,00,000
2. Reserves and Surplus
Securities Premium	2,40,000
Capital Reserve	14,400	2,54,400
Cash and Cash Equivalents
Cash at Bank		14,54,400