Question

Elite Ltd. invited applications from public for 5,00,000 equity shares of ₹10 each issued at ₹11 per share. The payment was to be made as follows: ₹3 on Application; ₹4 on Allotment including premium, and ₹4 on call.
Applications for 6,50,000 shares were received. Allotment of shares was made as follows:

1. 100% shares to applicants of 4,00,000 shares;
2. 50% shares to applicants of 2,00,000 shares,
3. No allotment to applicants of 50,000 shares.

A shareholder to whom 500 shares were allotted under category (i) paid the full amount due on shares along with the allotment money. Another shareholder holding 1,000 shares failed to pay the amount due on call. His shares were forfeited, and 800 of these shares were subsequently re-issued as fully paid-up @ ₹8 per share. Pass the journal entries and give Balance Sheet of the company.

Answer 1

Journal entries In the books of Elite Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		19,50,000
	To Share Application A/c			19,50,000
	(Application money received on 6,50,000 shares @ ₹3 each)
2.	Share Application A/c     ...Dr.		19,50,000
	To Share Capital A/c			15,00,000
	To Share Allotment A/c			3,00,000
	To Bank A/c			1,50,000
	(Application money adjusted: 4,00,000 shares allotted fully; 2,00,000 shares allotted 50%; 50,000 shares rejected and refunded)
3.	Share Allotment A/c     ...Dr.		20,00,000
	To Share Capital A/c			15,00,000
	To Securities Premium A/c			5,00,000
	(Allotment money due on 5,00,000 shares @ ₹4 including ₹1 premium)
4.	Bank A/c     ...Dr.		19,00,000
	Calls in Advance A/c     ...Dr.		2,000
	To Share Allotment A/c			20,00,000
	(Allotment money received including ₹2,000 received in advance on 500 shares)
5.	Share Call A/c     ...Dr.		20,00,000
	To Share Capital A/c			20,00,000
	(Call money due on 5,00,000 shares @ ₹4 each)
6.	Bank A/c     ...Dr.		19,98,000
	Calls in Arrears A/c     ...Dr.		2,000
	To Share Call A/c			20,00,000
	(Call money received except from 1,000 shares)
7.	Share Capital A/c     ...Dr.		10,000
	To Calls in Arrears A/c			4,000
	To Share Forfeiture A/c			6,000
	(Forfeiture of 1,000 shares for non-payment of call money)
8.	Bank A/c     ...Dr.		6,400
	Share Forfeiture A/c     ...Dr.		1,600
	To Share Capital A/c			8,000
	(Reissue of 800 forfeited shares @ ₹8 each)
9.	Share Forfeiture A/c     ...Dr.		3,200
	To Capital Reserve A/c			3,200
	(Profit on reissue of shares transferred to Capital Reserve)