Question

On 1st April, 2023 Kanishk Ltd. made an issue of 4,000 Equity shares of ₹100 each, payable as follows:

	₹
On Application	30
On Allotment	20
On 1st Call	40
On 2nd and Final Call	10

Applications were received for 10,000 shares and pro-rata allotment was made to all the applicants.

Excess money received on application was utilised towards allotment and subsequent calls. One shareholder who had applied for 500 shares did not pay the final call and his shares were forfeited. Of the forfeited shares, the company reissued 150 shares as fully paid up at ₹ 90 per share.

You are required to pass journal entries in the books of the company for the year ending 31st March, 2024.

Answer 1

Journal entries In the books of Kanishk Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		3,00,000
	To Share Application A/c			3,00,000
	(Received application money @ ₹30 on 10,000 shares)
2.	Share Application A/c     ...Dr.		3,00,000
	To Share Capital A/c (4,000 × ₹30)			1,20,000
	To Share Allotment A/c (4,000 × ₹20)			80,000
	To Calls-in-Advance A/c			1,00,000
	(Application money adjusted to capital, allotment, and calls in advance)
3.	Share Allotment A/c     ...Dr.		80,000
	To Share Capital A/c			80,000
	(Allotment due @ ₹20 on 4,000 shares – already received)
4.	Share First Call A/c     ...Dr.		1,60,000
	To Share Capital A/c			1,60,000
	(First call due @ ₹40 on 4,000 shares)
5.	Calls-in-Advance A/c     ...Dr.		1,00,000
	Bank A/c     ...Dr.		60,000
	To Share First Call A/c			1,60,000
	(First call money adjusted from advance and balance received)
6.	Share Second & Final Call A/c     ...Dr.		40,000
	To Share Capital A/c			40,000
	(Second call due @ ₹10 on 4,000 shares)
7.	Bank A/c     ...Dr.		38,750
	Calls-in-Arrears A/c     ...Dr.		1,250
	To Share Second & Final Call A/c			40,000
	(Final call received except from shareholder of 500 shares)
8.	Share Capital A/c     ...Dr.		5,000
	To Calls-in-Arrears A/c			1,250
	To Share Forfeiture A/c			3,750
	(500 shares forfeited for non-payment of final call)
9.	Bank A/c     ...Dr.		13,500
	Share Forfeiture A/c     ...Dr.		1,500
	To Share Capital A/c			15,000
	(150 shares reissued @ ₹90 each as fully paid-up)
10.	Share Forfeiture A/c     ...Dr.		12,000
	To Capital Reserve A/c			12,000
	(Profit on reissue of 150 forfeited shares transferred to Capital Reserve)

Working Notes:

1) Applications received: 10,000 shares

2) Shares issued: 4,000

3) Pro-rata ratio: 10,000 : 4,000 = 2.5 : 1

4) Excess application received: ₹ 3,00,000 – ₹ 1,20,000 = ₹ 1,80,000

5) ₹80,000 adjusted to allotment, ₹ 1,00,000 to Calls in Advance

Calls-in-Arrears for 500 shares × ₹ 2.50 (final call unpaid) = ₹ 1,250