Question

Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹  10 each, issued the entire amount of the shares payable as:
 ₹  5 on application  (including premium ₹ 2 per share),
 ₹  4 on allotment, and
 ₹  3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on  which the allotment  money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7  per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.

Answer 1

Authorised capital 20,000 shares of 10 each

Issued and applied 20,000 shares of Rs 10 each at a premium Rs 2

Payable as:

Application	=	Rs 5	(3+2)
Allotment	=	Rs 4
First and Final Call	=	Rs 3
		Rs 12	(10+2)

Books of Krishna & Co. Ltd.
Journal

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		1,00,000
	To Equity Share Application A/c				1,00,000
	(Share application money received for 20,000 shares at Rs 5 each)
	Equity Share Application A/c	Dr.		1,00,000
	To Equity Share Capital A/c				60,000
	To Securities Premium A/c				40,000
	(Share application of 20,000 shares transferred to Shares Capital at Rs 3 per share and Securities Premium and Rs 2 per share)
	Equity Share Allotment A/c	Dr.		80,000
	To Equity Share Capital A/c				80,000
	(Share allotment due on 20,000 shares at Rs 4 each)
	Bank A/c	Dr.		79,200
	Calls-in-Arrears A/c	Dr.		800
	To Equity Share Allotment A/c				80,000
	(Share allotment received on 19,800 shares and holders of 200 shares failed to pay it)
	Equity Share first and final call A/c	Dr.		60,000
	To Equity Share Capital A/c				60,000
	(First and Final call due on 20,000 shares at Rs 3 each)
	Bank A/c	Dr.		58,500
	Calls-in-Arrears A/c	Dr.		1,500
	To Equity Share First And Final Call A/c				60,000
	(Share first and final call of Rs 3 each received on 19,500 shares and holders of 500 shares failed to pay it)
	Equity Share Capital A/c	Dr.		2,000
	To Share Forfeiture A/c				600
	To Calls-in-Arrears A/c				1,400
	(200 shares of Rs 10 each forfeited for the non-payment of allotment Rs 4 and call Rs 7 per share)
	Equity Share Capital A/c	Dr.		3,000
	To Share Forfeiture A/c				2,100
	To Calls-in-Arrears A/c				900
	(300 shares of Rs 10 each forfeited for the non-payment of call money Rs 3 per share)
	Bank A/c	Dr.		2,800
	Share Forfeiture A/c	Dr.		1,200
	To Share Capital				4,000
	(400 shares of Rs 10 each re-issued at Rs 7 per share as fully paid-up)
	Share Forfeiture A/c	Dr.		800
	To Capital Reserve A/c				800
	(Balance in share forfeiture of 400 shares transferred to Capital Reserve)

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Krishna & Co Ltd.
Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,700
b. Reserves and Surplus	2	40,800
2. Non-Current Liabilities
3. Current Liabilities
Total		2,40,500
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,40,500
Total		2,40,500

NOTES TO ACCOUNTS 

Note No.	Particulars			Amount (Rs)
1	Share Capital
	Authorised Share Capital
	20,000 Equity Shares of Rs 10 each			2,00,000
	Issued Share Capital
	20,000 Equity Shares of Rs 10 each			2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,900 Equity Shares of Rs 10 each	1,99,000		1,99,700
	Add: Shares Forfeited (100 shares × Rs 7)	700
2	Reserves and Surplus
	Securities Premium		40,000	40,800
	Capital Reserve		800
3	Cash and Cash Equivalents
	Cash at Bank			2,40,500

Working Notes:

1.	Capital Reserve of 200 shares on which only application received
	Share Forfeiture Cr.	3	per share (excluding premium)
	Share Forfeiture Dr.	3	per share
	Balance of Share Forfeiture	NIL

 

2.	Capital Reserve of 200 shares on which application and allotment received
	Share Forfeiture Cr.	Rs 7	per share (excluding premium)
	Share Forfeiture Dr.	Rs 3	per share
	Balance in Share Forfeiture	Rs 4	per share

 

Capital Reserve	=	200 Shares × Balance of Share Forfeiture (per share)
	=	200 × 4
	=	Rs 800