Question

Moti Ltd. invited application for issuing 10,00,000 Equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payable as follows:

On Application Rs 5 (Including premium)

On Allotment Rs 4

On First and Final Call Rs 3

Application for 15,00,000 share were received. Application for 3,00,000 shares were rejected and pro-rata allotment was made to the remaining applicants. Excess application money was utilized towards sums due on allotment. Giri who had applied for 24,000 shares failed to pay the allotment and call money. His shares were forfeited. Out of the forfeited shares 10,000 shares were reissued for Rs 8 per share fully paid up. Pass necessary journal entries in the books of Moti Ltd.

 

Answer 1

In the books of Moti Ltd.                                   Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		75,00,000
	To Equity Shares Application A/c				75,00,000
	(Share application money received for 15,00,000 shares at Rs 5 per share)
	Equity Share Application A/c	Dr.		75,00,000
	To Equity Share Capital A/c (10,00,000 × 3)				30,00,000
	To Securities Premium A/c (10,00,000 × Rs 2)				20,00,000
	To Bank A/c (3,00,000 × Rs 5)				15,00,000
	To Equity Share Allotment A/c (2,00,000 × Rs 5)				10,00,000
	(Application money of 10,00,000 shares transferred to equity share capital at Rs 3 each and Rs 2 to securities premium, Rs 10,00,000 adjusted on allotment and the balance Rs 15,00.000 returned)
	Equity Share Allotment A/c	Dr.		40,00,000
	To Equity Share Capital A/c				40,00,000
	(Allotment money due on 10,00,000 shares at Rs 4 each)
	Bank A/c	Dr.		29,40,000
	Calls-in-Arrears A/c	Dr.		60,000
	To Equity Share Allotment A/c				30,00,000
	(Allotment money received on 9,80,000 shares after adjustment of excess application money and a holder 20,000 shares failed to pay it)
	Equity Share First and Final Call A/c	Dr.		30,00,000
	To Equity Share Capital A/c				30,00,000
	(First and final call money due on 10,00,000 shares at Rs 3 each)
	Bank A/c	Dr.		29,40,000
	Calls-in-Arrears A/c	Dr.		60,000
	To Equity Share First and Final Call A/c				30,00,000
	(First and final call of Rs 3 each received on 9,80,000 shares and 20,000 shares failed to pay it)
	Equity Share Capital A/c	Dr.		2,00,000
	To Calls-in-Arrears A/c				1,20,000
	To Share Forfeiture A/c				80,000
	(20,000 shares forfeited due to non-payment of allotment and call money)
	Bank A/c (10,000 × Rs 8)	Dr.		80,000
	Forfeited Shares A/c (10,000 × Rs 2)	Dr.		20,000
	To Equity Share Capital A/c				1,00,000
	(10,000 forfeited shares re-issued for Rs 8 per share fully paid-up)
	Forfeited Shares A/c	Dr.		20,000
	To Capital Reserve A/c				20,000
	(Profit on re-issue transferred to Capital Reserve)