Question

X Ltd. was registered with an authorised capital of 2,00,000 shares of ₹10 each. It purchased assets of Y Ltd. for ₹3,00,000 and issued fully paid shares for purchase consideration. It also invited applications for 1,20,000 shares payable as under:

• ₹2.50 on application
• ₹2.50 on allotment
• ₹2 on first call and ₹3 on final call.

Amount due on Allotment and First Call was duly received. However, ₹3,58,800 were received on final call. Directors forfeited the shares of defaulting shareholders and reissued them at ₹8.50 per share as fully paid up. Pass entries in the Cash Book and Journal. Also prepare the opening Balance Sheet of the Company.

Answer 1

Journal entries In the books of X Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Sundry Assets A/c     ...Dr.		3,00,000
	To Y Ltd.			3,00,000
	(Assets purchased from Y Ltd.)
2.	Y Ltd.     ...Dr.		3,00,000
	To Share Capital A/c (30,000 shares × ₹10)			3,00,000
	(Fully paid shares issued to Y Ltd. in settlement)
3.	Bank A/c     ...Dr.		3,00,000
	To Share Application A/c			3,00,000
	(Application money received: 1,20,000 × ₹2.50)
4.	Share Application A/c     ...Dr.		3,00,000
	To Share Capital A/c			3,00,000
	(Application money transferred to Capital A/c)
5.	Share Allotment A/c     ...Dr.		3,00,000
	To Share Capital A/c			3,00,000
	(Allotment due @ ₹2.50 on 1,20,000 shares)
6.	Bank A/c     ...Dr.		3,00,000
	To Share Allotment A/c			3,00,000
	(Allotment money received)
7.	Share First Call A/c     ...Dr.		2,40,000
	To Share Capital A/c			2,40,000
	(First call due @ ₹2 on 1,20,000 shares)
8.	Bank A/c     ...Dr.		2,40,000
	To Share First Call A/c			2,40,000
	(First call money received)
9.	Share Final Call A/c     ...Dr.		3,60,000
	To Share Capital A/c			3,60,000
	(Final call due @ ₹3 on 1,20,000 shares)
10.	Bank A/c     ...Dr.		3,58,800
	Calls in Arrears A/c     ...Dr.		1,200
	To Share Final Call A/c			3,60,000
	(Final call received; 400 shares unpaid)
11.	Share Capital A/c     ...Dr.		4,000
	To Calls in Arrears A/c			1,200
	To Share Forfeiture A/c			2,800
	(400 shares forfeited for non-payment of final call)
12.	Bank A/c     ...Dr.		3,400
	Share Forfeiture A/c     ...Dr.		600
	To Share Capital A/c			4,000
	(400 forfeited shares reissued at ₹8.50 each as fully paid)
13.	Share Forfeiture A/c     ...Dr.		2,200
	To Capital Reserve A/c			2,200
	(Profit on reissue of forfeited shares transferred to Capital Reserve)

Cash Book (Bank column only)

Date	Particulars	Amount (₹)
1.	To Share Application A/c	3,00,000
2.	To Share Allotment A/c	3,00,000
3.	To Share First Call A/c	2,40,000
4.	To Share Final Call A/c	3,58,800
5.	To Share Reissue A/c	3,400
	Total	₹12,02,200

 

Balance Sheet of X. Ltd. As at ...
Liabilities	₹	Assets	₹
Share Capital		Fixed Assets (from Y Ltd.)	3,00,000
1,50,000 Equity Shares of ₹10 each	15,00,000	Bank Balance	12,02,200
(Incl. 30,000 to Y Ltd. and 1,20,000 to public)
Capital Reserve	2,200
Total	15,02,200	Total	15,02,200