Question

On April 1, 2022 the Directors of Ashoka Metals Ltd. issued 60,000 equity shares of ₹10 each at ₹12 per share, the amount payable as ₹5 on application (including premium), ₹4 on allotment and the balance on July 15, 2022.
On April 10, 2022 applications were received for 80,000 shares. Of the cash received in excess, ₹40,000 were returned and ₹60,000 were applied towards the amount due on allotment. The balance of allotment money was received on April 30, 2022. All the shareholders paid the call due on July 15, 2022, with the exception of one shareholder holding 500 shares. These shares were forfeited on August 31, 2022.
You are required to submit Journal Entries regarding the above transactions and also prepare the Balance Sheet of the Company on August 31, 2022.

Answer 1

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2022 Apr 1	Bank A/c     ...Dr.		4,00,000
	To Share Application A/c			4,00,000
	(Being application money received on 80,000 shares @ ₹5)
2022 Apr 10	Share Application A/c     ...Dr.		4,00,000
	To Share Capital A/c (60,000 × ₹3)			1,80,000
	To Securities Premium Reserve A/c (60,000 × ₹2)			1,20,000
	To Share Allotment A/c			60,000
	To Bank A/c (Refund)			40,000
	(Being application money adjusted; excess refunded and part applied towards allotment)
2022 Apr 30	Bank A/c     ...Dr.		1,80,000
	To Share Allotment A/c			1,80,000
	(Being balance of allotment money received)
2022 Jul 15	Share Final Call A/c     ...Dr.		1,20,000
	To Share Capital A/c			1,20,000
	(Being final call of ₹2 per share made on 60,000 shares)
2022 Jul 15	Bank A/c     ...Dr.		1,19,000
	To Share Final Call A/c			1,19,000
	(Being call money received except on 500 shares)
2022 Aug 31	Share Capital A/c (500 × ₹10)     ...Dr.		5,000
	To Share Final Call A/c (500 × ₹2)			1,000
	To Share Forfeiture A/c (500 × ₹8)			4,000
	(Being 500 shares forfeited for non-payment of final call)

 

Balance Sheet of Ashoka Metals Ltd.
Liabilities	Amount (₹)	Assets	Amount (₹)
1. Shareholders’ Funds:		Cash and Cash Equivalents (Bank) (Note - 3)	7,18,500
Share Capital (Note - 1)	5,98,500
Reserves and Surplus (Note - 2)	3,500
Total	6,02,000	Total	7,18,500

Notes to Accounts

Note 1: Share Capital

Particulars	₹
Issued and Subscribed Capital:
60,000 Equity Shares of ₹10 each	6,00,000
Less: Calls in arrears (500 × ₹2)	(1,000)
Total Paid-up Capital	5,98,500

Note 2: Reserves and Surplus

Particulars	₹
Share Forfeiture A/c (500 shares × ₹8 paid)	4,000
Less: Loss on call not paid (already debited)	(500)
Balance	3,500

Note 3: Cash and Cash Equivalents

Particulars	₹
Application Money (₹4,00,000 – ₹40,000 refund)	3,60,000
Allotment Money Received	1,80,000
Final Call Money Received	1,19,000
Total Bank Balance	7,18,500