Question

X Ltd. invited applications for issuing 50,000 equity shares of Rs 10 each. The amount was payable as follows:

On Application	:	Rs 2 per share
On Allotment	:	Rs 2 per share
On First Call	:	Rs 3 per share
On Second and Final Call	:	Balance amount

Applications for 70,000 shares were received. Applications for 10,000 shares were rejected and the application money was refunded.
Shares were allotted to the remaining applicants on a pro-rata basis and excess money received with applications was transferred towards sums due on allotment and calls, if any.
Gopal, who applied for 600 shares, paid his entire share money with application. Ghosh, who had applied for 6,000 shares, failed to pay the allotment money and his shares were immediately forfeited. These forfeited shares were re-issued to Sultan for Rs 20,000; Rs 4 per share paid up. The first call money and the second and final call money was called and duly received.

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

Answer 1

Journal of X Ltd.
Date	Particulars	L.F.	Debit Amount (Rs)	Credit Amount (Rs)
(i)	Bank A/c (Pro Rata Table)                                  Dr.		1,44,800
	To Equity Share Application A/c			1,44,800
	(Being application money received on 70,000 shares)
(ii)	Equity Share Application A/c                             Dr.		1,44,800
	To Equity Share Capital A/c (2*50,000)			1,00,000
	To Calls in Advance A/c			23,800
	To Bank A/c (2*10,000+10*100)			21,000
	(Being application money received transferred to Share Capital, adjusted on allotment and excess refunded)
(iii)	Equity Share Allotment A/c (2*50,000)                 Dr.		1,00,000
	To Equity Share Capital A/c (2*50,000)			1,00,000
	(Being allotment money due on 50,000 shares)
(iv)	Bank A/c                                                             Dr.		71,200
	Calls in Advance A/c                                            Dr.		20,800
	Calls in Arrears A/c (WN 1)        Dr.		8,000
	To Equity Share Allotment A/c (2*50,000)			1,00,000
	(Being allotment money received except 5000 shares of Ghosh)
(v)	Share Capital A/c (5,000×4)        Dr.		20,000
	To Calls in Arrears A/c			8,000
	To Share Forfeiture A/c (6,000×2)			12,000
	(Being 5000 shares of Ghosh forfeited due to non-payment of allotment money)
(vi)	Bank A/c                                    Dr.		20,000
	To Share Capital A/c(5,000×4)			20,000
	(Being 5000 forfeited shares of Ghosh reissued to Sultan as Rs 4 paid-up)
(vii)	Share Forfeiture A/c                                                Dr.		12,000
	To Capital Reserve A/c			12,000
	(Being amount forfeited transferred to Capital Reserve)
(viii)	Equity Share First Call A/c (3*50,000)                     Dr.		1,50,000
	To Equity Share Capital A/c (3*50,000)			1,50,000
	(Being first call money due on 50,000 shares)
(ix)	Bank A/c                                                               Dr.		1,48,500
	Calls in Advance A/c (3*500)                    Dr.		1,500
	To Equity Share First Call A/c (3*50,000)			1,50,000
	(Being First Call money received)
(x)	Equity Share Second & Final Call A/c (3*50,000)                                                                   Dr.		1,50,000
	To Equity Share Capital A/c (3*50,000)			1,50,000
	(Being first call money due on 50,000 shares)
(xi)	Bank A/c                                                           Dr.		1,48,500
	Calls in Advance A/c (3*500)                    Dr		1,500
	To Equity Share Second & Final Call A/c			1,50,000
	(Being Second & Final Call money received)

 

Working Note     Note No. Particulars Amount  (Rs) 1 Computation of Calls in Arrears     Allotment Due on Ghosh’s Shares (2*5000) 10,000   Less: Excess on Application 2*(6000-5000#) 2,000     8,000         #No.  of Shares allotted to Ghosh = 6000*50,000/60,000     =5000

                                                Pro Rata Table

Shares Applied For( Rs.2)		Shares Allotted ( Rs.2)		Allotment ( Rs.2)	First Call ( Rs.3)	Second & Final Call ( Rs.3)	Refund
Units	Rs.	Units	Rs.	Rs.	Rs.	Rs.	Rs.
600 59,400   10,000	6,000 1,18,800       20,000	500 49,500   ---------	1,000 99,000   --------	1,000 19,800   ---------	1,500 --------   --------	1,500 ----------   ----------	1,000 20,000   -------
70,000	1,44,800	50,000	1,00,000	20,000	1,500	1,500	21,000