Question

Raga Ltd. invited applications for issuing 85,000 equity shares of ₹ 100 each at par. The amount was payable as follows:

On Application – ₹ 30 per share

On Allotment – ₹ 40 per share

On First and final call – balance

Applications were received for 80,000 shares, and allotment was made to all the applicants in full. When the allotment was due, one shareholder failed to pay the amount on 300 shares held by him, and another shareholder holding 500 shares paid the entire amount on his shares. The first and final call was duly received, along with arrears of allotment.

Pass necessary journal entries for the above transactions in the books of Raga Ltd. Open ‘Calls in Arrears Account’ and ‘Calls in Advance Account’ wherever necessary.

Answer 1

Journal of Raga Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c    ...Dr.		24,00,000	-
	To Equity Share Application A/c		-	24,00,000
	(Being application money received for 80,000 shares @ ₹ 30)
2.	Equity Share Application A/c   ...Dr.		24,00,000	-
	To Equity Share Capital A/c		-	24,00,000
	(Being application money transferred to the capital account)
3.	Equity Share Allotment A/c    ...Dr.		32,00,000	-
	To Equity Share Capital A/c		-	32,00,000
	(Being allotment money due on 80,000 shares @ ₹ 40)
4.	Bank A/c   ...Dr.		32,03,000	-
	Calls in Arrears A/c   ...Dr.		12,000	-
	To Equity Share Allotment A/c		-	32,00,000
	To Calls in Advance A/c		-	15,000
	(Being allotment received except on 300 shares, and advance received on 500 shares)
5.	Equity Share First & Final Call A/c   ...Dr.		24,00,000	-
	To Equity Share Capital A/c		-	24,00,000
	(Being first and final call due on 80,000 shares @ ₹ 30)
6.	Bank A/c   ...Dr.		23,97,000	-
	Calls in Advance A/c   ...Dr.		15,000	-
	To Equity Share First & Final Call A/c		-	24,00,000
	To Calls in Arrears A/c		-	12,000
	(Being call money and previous arrears received; advance adjusted)

Working Notes:

1. Allotment Bank Receipt:

Total Due = ₹ 32,00,000

(−) Arrears (300 shares × ₹ 40): (₹ 12,000)

(+) Advance (500 shares × ₹ 30): ₹ 15,000

Net Received = ₹ 32,03,000

2. Final Call Bank Receipt:

Total Due = ₹ 24,00,000

Less: Advance already paid = (₹ 15,000)

Add: Allotment Arrears now received = ₹ 12,000

Net Received = ₹ 23,97,000