Question

Mukund Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at 10% premium. The amount per share was payable as follows: ₹ 3 on application, ₹ 3 (including premium) on allotment and balance amount on first and final call. Applications were received for 1,20,000 shares and shares were allotted on pro-rata basis to all the applicants. The excess money received on application was adjusted towards sums due on allotment only. Application money in excess to sums due on allotment was refunded. A shareholder who had applied for 6,000 shares, could not pay the call money and his shares were forfeited.

Pass necessary Journal entries for the above transactions in the books of Mukund Ltd.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		3,60,000
	To Equity Share Application A/c			3,60,000
	(Being application received on 1,20,000 share@ ₹3/- received)
2.	Equity Share Application A/c       ...Dr.		3,60,000
	To Equity Share Capital A/c			1,50,000
	To Equity share Allotment A/c			1,50,000
	To Bank A/c			60,000
	(Being share application money adjusted)
3.	Equity Share Allotment A/c        ...Dr.		1,50,000
	To Equity Share Capital A/c			1,00,000
	To Securities Premium Reserve  A/c			50,000
	(Being allotment money made due)
4.	Equity Share First and Final Call A/c      ...Dr.		2,50,000
	To Equity Share Capital A/c			2,50,000
	(Being first and final call made due @ ₹5/- per share)
5.	Bank A/c    ...Dr.		2,37,500
	Calls-in-Arrears A/c (2,500 × 5)    ...Dr.		12,500
	To Equity Share First and Final Call A/c			2,50,000
	(Being 2,500 @ ₹5/- did not received on call)
6.	Equity Share Capital A/c (2,500 x 10)       ...Dr.		25,000
	To EquityShare Forfeiture A/c			12,500
	To Calls-in-Arrears A/c			12,500
	(Being 2,500 shares forfeited)

Working Note:

No. of Equity Share Allotted =`(50,000)/(1,20,000)xx6,000 =2,500` Equity Share

2500 Share forfeited

Total (2500 × 10)	25,000
Received (2500 × 5)	12,500
Calls-in-arrears	12,500