Question

Amisha Ltd. inviting applications for 40,000 shares of Rs. 100 each at a premium of Rs. 20 per share. Amount payable on application Rs. 40; on allotment Rs. 40 (Including premium); on first call Rs. 25, and on second and final call Rs. 15.

Applications were received for 50,000 shares, and allotment was made on a pro-rata basis. Excess money on the application was adjusted on the sums due on allotment.

Rohit, to whom 600 shares were allotted, failed to pay the allotment money, and his shares were forfeited after allotment. Ashmita, who applied for 1,000 shares, failed to pay the two calls, and his shares were forfeited after the second call. Of the shares forfeited, 1,200 shares were sold to Kapil for Rs 85 per share as fully paid, the whole of Rohit’s shares being included.

Record necessary journal entries.

Answer 1

Journal Entries in the books of Amisha Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ..Dr.		20,00,000	-
	To Share Application A/c		-	20,00,000
	(Share Application money received on 50,000 shares @ 40 per share)
2.	Share Application A/c   ...Dr.		20,00,000	-
	To Share Capital A/c		-	16,00,000
	To Share Allotment A/c		-	4,00,000
	(Share Application money adjusted)
3.	Share Allotment A/c   ...Dr.		16,00,000	-
	To Share Capital A/c		-	8,00,000
	To Share Premium A/c		-	8,00,000
	(Share Allotment money due including premium)
4.	Bank A/c   ...Dr.		11,82,000	-
	To Share Allotment A/c		-	11,82,000
	(Share Allotment money received except 600 shares)
5.	Share Capital A/c   ...Dr.		36,000	-
	Share premium A/c   ...Dr.		12,000	-
	To Share Allotment A/c		-	18,000
	To Share Forfeiture A/c		-	30,000
	(600 shares forfeited after allotment)
6.	Share First Call A/c   ...Dr.		9,85,000	-
	To Share Capital		-	9,85,000
	(First Call money in due on 39,400 shares)
7.	Bank A/c   ...Dr.		9,65,000	-
	To Share First Call A/c		-	9,65,000
	(First Call money received except 800 shares)
8.	Share Second and Final Call A/c   ...Dr.		5,91,000	-
	To Share Capital A/c			5,91,000
	(Second and Final Call money due on 39,400 shares)
9.	Bank A/c   ..Dr.		5,79,000	-
	To Share Second and Final Call A/c		-	5,79,000
	(Second and Final Call money received except 800 shares)
10.	Share Capital A/c   ...Dr.		80,000	-
	To Share First Call A/c		-	20,000
	To Share Second & Final Call A/c		-	12,000
	To Share Forfeiture A/c		-	48,000
	(800 shares forfeited)
11.	Bank A/c   ...Dr.		1,02,000	-
	Share Forfeiture A/c   ...Dr.		18,000	-
	To Share Capital A/c		-	1,20,000
	(Forfeited shares reissued 1,200 @ 85 per share)
12.	Share Forfeiture A/c   ...Dr.		48,000	-
	To Capital Reserve A/c		-	48,000
	(Profit on 1,200 reissued shares is transferred to the capital reserve account)

 

Dr.	Cash Book (Bank Column)						Cr.
Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
	To Share Application		20,00,000		By Balance c/d		48,28,000
	To Share Allotment		11,82,000
	To Share First Call		9,65,000
	To Share Final Call		5,79,000
	To Share Capital		1,02,000
			48,28,000				48,28,000

Working note:

1. Amount received on allotment:

Number of shares applied by Rohit = `"Total number of applied shares"/"Total number of allotted shares" xx " No. of shares allotted."`

= `(50,000)/(40,000) xx 600`

= 750 shares

2.

Particulars	(₹)
Call in arrears by Rohit on allotment:
Money received on Application (750 × 40)	30,000
Less: Amount adjusted on Application (600 × 40)	24,000
Amount adjusted on Allotment	6,000
Rohit’s money is due on Allotment (600 × 40)	24,000
Less: Money adjusted	6,000
Balance due on Allotment	18,000

3. On 600 Shares of Ashmita Reissued:

Number of shares allotted to Ashmita = `"Total number of applied shares"/"Total number of allotted shares" xx " No. of shares allotted."`

= `(40,000)/(50,000) xx 1000`

= 800 shares

From Rohit’s shares	30,000
Less: Reissue Discount (600 × 15)	9,000
Rohit’s transfer to capital reserve	21,000
From Ashmita’s shares: Amount transferred to share forfeiture on 600 shares forfeited (600 × 60)	36,000
Less: Amount adjusted on reissue 600 shares (600 × 15)	9,000
Ashmita’s transfer to capital reserve	27000

Hence, total capital reserve = 21000 + 27000

= 48000