Question

JJK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows:

On Application	---	₹ 2 per share,
On Allotment	---	₹ 4 per share; and
On First and Final call	---	Balance Amount.

The issue was oversubscribed three times. Applications for 30%  shares were rejected and money refunded .Allotment was made to the remaining applicants as follows:

Category	No . of Shares Applied	No. of Shares Allotted
I	80,000	40,000
II	25,000	10,000

 Excess money  paid by the applicants who were allotted shares was adjusted towards sums due on allotment .
Deepak, a shareholder belonging  to Category I , who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment . Afterwards, first and final call was made and was duly received . The forfeited shares of Deepak and Raju were reissued at ₹11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of company. 

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Bank A/c (1,50,000 × 2)	Dr.		3,00,000
	To Share Application A/c				3,00,000
	(Application money received on 1,50,000 shares)
	Share Application A/c	Dr.		3,00,000
	To Share Capital A/c				1,00,000
	To Share Allotment A/c				1,10,000
	To Bank A/c				90,000
	(Application money transferred to Share Capital)
	Share Allotment A/c (50,000 × 4)			2,00,000
	To Share Capital A/c				2,00,000
	(Allotment money due on 50,000 shares)
	Bank A/c	Dr.		88,900
	To Share Allotment A/c (WN2)				88,900
	(Allotment money received)
	Share Capital A/c (600 × 6)	Dr.		3,600
	To Share Allotment A/c (1,000 + 100)				1,100
	To Share Forfeiture A/c (2,000 + 500)				2,500
	(600 shares forfeited for non–payment of allotment money)
	Share First and Final Call A/c	Dr.		1,97,600
	To Share Capital A/c				1,97,600
	(Call money due on 49,400 shares)
	Bank A/c	Dr.		1,97,600
	To Share First and Final Call A/c				1,97,600
	(Call money received)
	Bank A/c (600 × 11)	Dr.		6,600
	To Share Capital A/c				6,000
	To Security Premium Reserve A/c				600
	(600 shares re–issued at Rs 11 per share)
	Share Forfeiture A/c	Dr.		2,500
	To Capital Reserve A/c				2,500
	(Profit on re–issue transferred to Capital Reserve)

Working Notes:

WN1: Computation Table

Categories	Shares Applied	Shares Allotted	Money received on Application  @ Rs 2 each	Money transferred to Share Capital @ Rs 2 each	Excess Application Money	Amount adjusted on Allotment	Money refunded
I	80,000	40,000	1,60,000	80,000	80,000	80,000	–
II	25,000	10,000	50,000	20,000	30,000	30,000	–
III	45,000	–	90,000	–	–	–	90,000
	1,50,000	50,000	3,00,000	1,00,000	1,10,000	1,10,000	90,000

WN 2: Calculation of Amount Received on Allotment

Amount Due on Allotment	2,00,000
Less: Excess Received	1,10,000
Balance to be Received	90,000
Less: Amount not paid by Deepak	(1,000)
Less: Amount not paid by Raju	(100)
Amount received on Allotment	88,900

WN 3: Calculation of Shares Applied/Allotted  

Shares Alloted to Deepak = `40000/80000 xx 1000 = 500`

Shares Applied by Raju = `25000 / 10000 xx 100 = 250`

Amount not paid by Deepak on Allotment

Amount received on Application	2,000
Less: Transferred to Share Capital	(1,000)
Excess received on Application	1,000
Amount due on allotment	2,000
Less: Excess adjustment	(1,000)
Amount unpaid by Deepak	1,000

Amount not paid by Raju on Allotment

Amount received on Application	500
Less:  Transferred to Share Capital	(200)
Excess received on Application	300
Amount due on allotment	400
Less: Excess adjustment	(300)
Amount unpaid by Raju	100