Question

Modern Marbles Ltd. was registered with an authorised capital of ₹10,00,000 divided into 7,500 Equity Shares of ₹  100 each and, 2,500 Preference Shares of ₹100 each. 1,000 Equity Shares and 500; 9% Preference Shares were offered to public on the following terms – Equity Shares payable ₹10 on application, ₹40 on allotment and the balance in two calls of ₹  25 each. Preference Shares are payable ₹ 25 on application, ₹ 25 on allotment and ₹50 on first and final call. All the shares were applied for and allotted . Amount due was duly received. Prepare Cash Book and pass necessary Journal entries to record the above issue of shares and show how the Share Capital will appear in the Balance Sheet.

Answer 1

Authorised Capital:

Equity Shares 7,500 of ₹ 100 each.

9% Preference Shares 2,500 of ₹ 100 each.

Issued Capital:

Equity Shares 1,000 of ₹ 100 each.

Payable as

₹ 10 on Application

₹ 40 on Allotment

₹ 25 on First Call

₹ 25 on Final Call

Preference Shares 500 of ₹ 100 each.

Payable as

₹ 25 on application

₹ 25 on allotment

₹ 50 on first and final call

Books of Modern Marbles Limited
Cash Book

Dr.                                                                               Cr. 

Date	Particulars	L.F.	Bank (₹)	Date	Particulars	L.F.	Bank (₹)
	Equity Share Application		10,000
	Preference Share Application		12,500
	Equity Share Allotment		40,000
	Preference Share Allotment		12,500
	Equity Share First Call		25,000
	Preference Share First and Final Call		25,000
	Equity Share Final Call		25,000		Balance c/d		1,50,000
			1,50,000				1,50,000

Journal

	Particulars		L.F.	Debit Amount (₹)	Credit Amount  (₹)
	Equity Share Application A/c	Dr.		10,000
	To Equity Share Capital A/c				10,000
	(Equity share application of 1,000 shares of ₹ 10 each transferred to Equity Share Capital Account)
	Preference Share Application A/c	Dr.		12,500
	To 9% Preference Share Capital A/c				12,500
	(Preference share applications of 500 shares ₹ 25 each transferred to 9% Preference Share Capital Account)
	Equity Share Allotment A/c	Dr.		40,000
	To Equity Share Capital A/c				40,000
	(Equity share allotment due on 1,000 shares at ₹ 40 each)
	Preference Share Allotment A/c	Dr.		12,500
	To 9% Preference Share Capital A/c				12,500
	(Preference share allotment due on 500 shares at ₹ 25 each)
	Equity Share First Call A/c	Dr.		25,000
	To Equity Share Capital A/c				25,000
	(Equity share first call due on 1,000 shares at ₹ 25 each)
	Preference Share First and Final Call A/c	Dr.		25,000
	To 9% Preference Share Capital A/c				25,000
	(Preference share first and final call due on 500 shares at ₹ 50 each)
	Equity Share Final Call A/c	Dr.		25,000
	To Equity Share Capital A/c				25,000
	(Equity share final call due on 1,000 shares at ₹ 25 each)

Balance Sheet

Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,50,000
2. Non-Current Liabilities
3. Current Liabilities
Total		1,50,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	2	1,50,000
Total		1,50,000

NOTES TO ACCOUNTS 

Note No.	Particulars				Amount (Rs)
1	Share Capital
	Authorised Share Capital
	75,000 Equity Shares of ₹ 100 each	7,50,000			10,00,000
	25,000 9% Preference Shares of ₹ 100 each	2,50,000
	Issued Share Capital
	1,000 Equity Shares of ₹ 100 each		1,00,000
	500 9% Preference Shares of ₹ 100 each		50,000		1,50,000
	Subscribed, Called-up and Paid-up Share Capital
	1,000 Equity Shares of ₹ 100 each		1,00,000		1,50,000
	500 9% Preference Shares of ₹ 100 each			50,000
2	Cash and Cash Equivalents
	Cash at Bank				1,50,000