Question

Zee Ltd. invited application for issuing 3,40,000 equity shares of ₹ 10 each at a premium of ₹ 5 per share. The amount was payable as follows:

On application ₹ 4 per share (including ₹ 2 premium)

On allotment ₹ 5 per share (including ₹ 2 premium)

On First and Final call-Balance 

Applications for 6,00,000 shares were received. Application for 1,80,000 shares were rejected and application money was refunded. Shares were allotted on prorate basis to the remaining applicants. Excess money received with applications was adjusted towards sum due on allotment.

Yamini who had applied for 2100 shares failed to pay allotment money and her shares were forfeited immediately. Vani to whom 6800 shares were allotted paid her entire share money due on allotment.

Afterwards First and Final call was made and was duly received. Out of the forfeited shares 850 shares were reissued to Vansh at ₹ 8 per share fully paid up.

Pass necessary journal entries for the above transactions in the books of the company by opening calls-in-arrears and calls-in-advance accounts.

Answer 1

Books of Zee Ltd. Journal Entries
Date	Particulars	L.F.	A (₹)	B (₹)
	Bank A/c    ...Dr.		24,00,000	-
	To Equity Share Application A/c (6,00,000 × 4)		-	24,00,000
	(Being Application money received for 6,00,000 shares @ ₹ 4 per share)
	Equity Share Application A/c    ...Dr.		24,00,000	-
	To Equity Share capital A/c (3,40,000 × 2)		-	6,80,000
	To Securities Premium Reserve A/c (3,40,000 × 2)		-	6,80,000
	To Equity Share Allotment A/c		-	3,20,000
	To Bank A/c (1,80,000 × 4)		-	7,20,000
	(Being application money of 3,40,000 shares transferred to share capital and Balance adjusted on allotment and refunded)
	Equity Share Allotment A/c    ...Dr.		17,00,000	-
	To Equity Share Capital A/c		-	10,20,000
	To Securities Premium Reserve A/c		-	6,80,000
	(Being allotment money due on 3,40,000 shares @ 5 each, including premium ₹ 2 per share)
	Bank A/c    ...Dr.		14,13,900	-
	Calls in Arrears A/c    ...Dr.		6,900	-
	To Equity share Allotment A/c		-	13,80,000
	To Calls in Advance A/c (6800 × 6)		-	40,800
	(Being allotment money received except. on 1,700 shares)
	Equity Share Capital A/c (1700 × 5)    ...Dr.		8,500	-
	Securities Premium Reserve A/c (1700 × 2)    ...Dr.		3,400	-
	To Calls in Arrears A/c		-	6,900
	To Forfeited Shares A/c		-	5,000
	(Being 1,700 shares forfeited for non-payment of allotment money)
	Equity Share First and Final Call A/c (3,38,300 × 6)    ...Dr.		20,29,800	-
	To Equity Share Capital A/c (3,38,300 × 5)		-	16,91,500
	To Securities Premium Reserves A/c (3,38,300 × 1)		-	3,38,300
	(Being First Call Money due on 3,38,250 Shares @ ₹ 6 per shares including ₹ 1 premium)
	Bank A/c    ...Dr.		19,89,000	-
	Calls-in-Advance A/c    ...Dr.		40,800	-
	To Equity Share First and Final Call A/c		-	20,29,800
	(Being money received)
	Bank A/c (850 × 8)    ...Dr.		6,800	-
	Forfeited Shares A/c (850 × 2)    ...Dr.		1,700	-
	To Equity Share Capital A/c		-	8,500
	(Being 850 shares re-issued @ 8 per share and fully paid)
	Forfeited Shares A/c    ...Dr.		800	-
	To Capital Reserve A/c		-	800
	(Being profit on re-issued of shares transferred to Capital Reserve A/c)

Working Note:

(1) 

Applied Shares	Allotted Shares
1,80,000	Nil
4,20,000	3,40,000

(2) Calculation of Unpaid Allotment money by Yamin:

Applied Shares = 2,100

Allotted Shares = `(3,40,000)/(4,20,000)xx2,100` = 1,700

Allotment Money due (1,700 × 5) = 8,500

Less: Excess Adjustment (400 × 4) = 1,600

= 6,900

(3) Forfeited Amount =  (1,700 × 2) + 1,600 = 5,000

(4) Capital Reserve = `((5,000)/(1,700)xx850)-1,700`

= 2,500 – 1,700 

= ₹ 800