Question

'Sulabh Ltd.' invited applications for issuing 1,50,000 equity shares of Rs 10 each at a premium of  Rs 3 per share. The amount was payable as follow

On application - Rs 2 per share
On allotment - Rs 6 per share (including premium)
On first and final call - the balance

Applications for 2,00,000 shares were received and shares were allotted on pro-rata basis to all the applicants. Excess money received with applications was adjusted towards sums due on allotment. Suman who had applied for 2,000 shares failed to pay the allotment and call money. Raman failed to pay the first and final call on his 500 shares. Shares of both Suman and Raman were forfeited after the final call was made. The forfeited shares were re-issued for Rs 12 per share as fully paid up.

Pass necessary Journal Entries for the above transactions in the books of the company.

Answer 1

Books of Sulabh Ltd Journal
Date	Particulars	L.F.	Dr. Rs	Cr. Rs
	Bank A/c   Dr.     To Equity Share Application A/c (Being application money received on 2,00,000 shares)		4,00,000	4,00,000
	Equity Share Application A/c   Dr.    To Equity Share Capital A/c    To Equity Share Allotment A/c (Being amount of application transferred to share capital and excess money is adjusted towards allotment)		4,00,000	3,00,000 1,00,000
	Equity Share Allotment A/c    Dr.    To Equity Share Capital A/c    To Securities Premium A/c (Being amount due on allotment)		9,00,000	4,50,000 4,50,000
	Bank A/c    Dr.    To Equity Share Allotment A/c (Being amount received on share allotment)		7,92,000	7,92,000
	Equity Share First & Final Call    Dr.    To Equity Share Capital A/c (Being First and Final Call money due)		7,50,000	7,50,000
	Bank A/c    Dr.    To Equity Share First and Final Call A/c (Being money received on First and Final Call)		7,40,000	7,40,000
	Equity Share Capital A/c   Dr. Securities Premium A/c  Dr.      To Equity Share Forfeiture A/c (WN3)      To Equity Share Allotment A/c      To Equity Share First & Final Call A/c (Being shares of Suman and Raman forfeited)		20,000 4,500	6,500 8,000 10,000
	Bank A/c   Dr.    To Equity Share Capital A/c    To Securities Premium A/c (Being forfeited share were reissued for 12 as fully paid up)		24,000	20,000 4,000
	Equity Share Forfeiture A/c  Dr.    To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital reserve)		6,500	6,500

Working Notes:

WN 1: Calculation of Amount not received on Allotment on First and Final Call

Shares allotted to Suman = `150000/200000 xx 2000` = 1500 shares

Amount received on 2,000 shares of 2 each = 4,000

Amount transferred to share Capital (1,500 x 2) = 3,000

Excess money received on application = 1,000

Amount due on Allotment @ 6 each = 9,000 (4,500 + 4,500)

Amount not received on Securities Premium = 4,500

Amount not received on allotment = 3,500 (4,500 – 1,000)

Amount not received on first and final call = 7,500 (1,500 x 5)

WN 2: Calculation of amount not received from Raman
Amount not received on first and final call = 2,500 (500 x 5)

WN 3 Calculation of amount credited in Share Forfeiture Account

Amount received from Suman = 4,000

Amount received from Raman (exluding premium amount) = 2,500 (500 x 5)