Question

Printkit Limited invited applications for issue of 80,000 equity shares of ₹ 10 each. The amount was payable as follows:

On Application - ₹ 3 per share

On Allotment - ₹ 2 per share

On First and Final call - Balance

Applications for 1,50,000 shares were received. Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants on the following basis:

Category A - Applicants for 80,000 shares were allotted 40,000 shares.

Category B - Applicants for 60,000 shares were allotted 40,000 shares.

Excess money received on application was adjusted towards amount due on allotment and first and final call. All the amounts due on allotment and first and final call were duly received.

Pass necessary Journal entries in the books of Printkit Limited.

Answer 1

Journal Entries in the Books of Printkit Limited
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		4,50,000
	To Shares Application A/c			4,50,000
	(Application money received on 1,50,000 shares @ ₹3 per share)
2.	Shares Application A/c   ...Dr.		4,50,000
	To Share Capital A/c			2,40,000
	To Shares Allotment A/c			1,40,000
	To Calls-in-Advance A/c			40,000
	To Bank A/c			30,000
	(Application money transferred, excess adjusted towards allotment and call, and money on rejected applications refunded)
3.	Shares Allotment A/c   ...Dr.		1,60,000
	To Share Capital A/c			1,60,000
	(Allotment money due on 80,000 shares @ ₹2 per share)
4.	Bank A/c   ...Dr.		20,000
	To Shares Allotment A/c			20,000
	(Balance allotment money received after adjustment of excess application money)
5.	Shares First and Final Call A/c   ...Dr.		4,00,000
	To Share Capital A/c			4,00,000
	(First and Final Call money due on 80,000 shares @ ₹5 per share)
6.	Calls-in-Advance A/c   ...Dr.		40,000
	Bank A/c   ...Dr.		3,60,000
	To Shares First and Final Call A/c			4,00,000
	(First and Final Call money received after adjustment of Calls-in-Advance)

Working Note:

Shares issued: 80,000 shares

Shares applied for: 1,50,000 shares

Applications rejected: 10,000 shares

Application money received:

1,50,000 × ₹ 3 = ₹ 4,50,000

Refund on 10,000 rejected shares:

10,000 × ₹ 3 = ₹ 30,000

Category A

80,000 shares applied → 40,000 shares allotted.

Excess application money:

(80,000 − 40,000) × ₹ 3 = ₹ 1,20,000

Allotment due:

40,000 × ₹ 2 = ₹ 80,000

Therefore:

₹ 1,20,000 − ₹ 80,000 = ₹ 40,000

₹ 80,000 is adjusted towards allotment and ₹ 40,000 towards First and Final Call as Calls-in-Advance.

Category B

60,000 shares applied → 40,000 shares allotted.

Excess application money:

(60,000 − 40,000) × ₹ 3 = ₹ 60,000

This ₹ 60,000 is adjusted towards allotment.

Therefore, total excess application money adjusted towards allotment:

₹ 80,000 + ₹ 60,000 = ₹ 1,40,000

Calls-in-Advance:

₹ 40,000