Question

HCF Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each at a discount of 10%. The amount was payable as follows:
On application and allotment – 4 per share
On first and final call – the balance amount.

Applications for 2,00,000 share were received. Applications for 50,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made and was duly received except on 1,500 share applied by Raja. His share were forfeited. The forfeited shares were re-issued at maximum discount permissible under law.

Pass necessary journal entries for the above transactions in the books of the company.

Answer 1

	Journal Entry
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
		Bank A/c	Dr.		8,00,000
		To Equity Share Application and Allotment A/c				8,00,000
		(Share application and allotment received on 2,00,000 of Rs 4 each excluding discount of Re 1 each)
		Equity Share Application and Allotment A/c	Dr.		8,00,000
		Discount on issue of Shares A/c	Dr.		75,000
		To Equity Share Capital A/c				3,75,000
		To Bank A/c				2,00,000
		To Equity Share First and Final Call A/c				3,00,000
		(Share application of 75,000 shares transferred to share capital , share application and allotment on 50,000 shares refunded and rest is adjusted on share first and final call)
		Equity Share First and Final Call A/c	Dr.		3,75,000
		To Equity Share Capital A/c				3,75,000
		(Share first and final call due on 75,000 shares of Rs 5 each)
		Bank A/c	Dr.		74,250
		Calls-in-Arrears A/c	Dr.		750
		To Equity Share First and Final Call A/c				75,000
		(Share first and final call received)
		Equity Share Capital A/c	Dr.		7,500
		To Discount on issue of shares A/c				750
		To Share Forfeiture A/c	Dr.			6,000
		To Calls-in-Arrears A/c				750
		(750 shares were Forfeited for non-payment of share first and final call of Rs 5 each)
		Bank A/c	Dr.		750
		Discount on issue of Shares A/c	Dr.		750
		Shares Forfeiture A/c	Dr.		6,000
		To Equity Share Capital A/c				7,500
		( Forfeited shares were re-issued at maximum permissible discount by law)

	Computation Table
Categories		Shares  Applied	Shares Allotted	Money received on Application and Allotment @ Rs 4 each excluding discount of Re 1 per share	Money transfers to Share Capital @ Rs 5 each	Money transfers to Discount on issue @ Rs 1 each	Excess Application and Allotment money	Share First and Final Call due @ Rs 5 each	Amount to be received on Share First and Final Call after adjustment	Money refunded
I		50,000	Nil	2,00,000						2,00,000
II		1,50,000	75,000	6,00,000	3,75,000	75,000	3,00,000	3,75,000	75,000
		2,00,000	75,000	8,00,000	3,75,000	75,000	3,00,000	3,75,000	75,000	2,00,000