Question

Raja Ltd. invited applications for issuing 50,000 Equity Shares of ₹ 10 each . The amount was payable as follows:           

On application               ---                     ₹ 3 per share On allotment                  ---                    ₹ 5 per share, On first and final call      ---                    Balance.

Applications for 70,000 shares were received . Allotment was made to all applicants on pro rata basis. Excess money received on application was adjusted towards sums due on allotment . Ramesh, who had applied for 700 shares , did not pay the allotment money and on his failure to pay the allotment money his shares were forfeited. Afterwards , the first and the final call was made . Adhar, who had been allotted 500 shares, did not pay the first and final call . His shares were also forfeited . Out of the forfeited shares 900 shares were reissued at ₹ 8 per share as fully paid-up . The reissued shares included all the  shares of Ramesh.
Pass necessary journal entries for the above  transactions in the books of the company.  

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c (3×70,000)	Dr.		2,10,000
	To Equity Share Application A/c				2,10,000
	(Application money on 70,000 shares received)
	Equity Share Application A/c	Dr.		2,10,000
	To Equity Share Capital A/c (3×50,000)				1,50,000
	To Equity Share Allotment A/c (WN2)				60,000
	(Share Application money on 50,000 shares transferred to share capital account and excess was utilised on allotment)
	Equity Share Allotment A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,50,000
	(Allotment money due on allotment)
	Bank A/c (WN2)	Dr.		1,88,100
	To Equity Share Allotment A/c				1,88,100
	(Allotment money received on 49,500 shares and Rs 60,000 excess money adjusted)
	Equity Share Capital A/c	Dr.		4,000
	To Equity Share Allotment A/c(WN1)				1,900
	To Equity Share Forfeiture A/c(WN1)				2,100
	(500 shares forfeited for non payment of allotment money
	Equity Share First and Final Call A/c	Dr.		99,000
	To Equity Share Capital A/c				99,000
	(Share Call money due)
	Bank A/c	Dr.		98,000
	To Equity Share First and Final Call A/c				98,000
	(Call money received on 49,000 shares)
	Equity Share Capital A/c	Dr.		5,000
	To Equity Share First and Final Call A/c				1,000
	To Equity Share Forfeiture A/c (8×500)				4,000
	(500 shares forfeited for non payment of Call money)
	Bank A/c	Dr.		7,200
	Equity Share Forfeiture A/c	Dr.		1,800
	To Equity Share Capital				9,000
	(900 shares reissued at Rs 8 per share)
	(Share call money received and Calls-in-Advance money adjusted)
	Share Forfeiture A/c (WN3)	Dr.		3,500
	To Capital Reserve A/c				3,500
	(Profit on forfeiture of shares transferred)

Working Note:  

WN 1

Shares applied by Ramesh : 700 shares

Shares allotted : `700 xx 50000/70000 = 500 "shares"`

Application Money received from Ramesh :	700 × 3 =	2100
Less : Application money due on allotted shares :	500 × 3 =	(1500)
Excess application money adjusted on allottment		600

 

Allotment money due on share allotted	5×500=	2500
Less : Excess application money received		(600)
Allotment money due but not received		1900

WN 2

Allotment due (Gross) 50000 × 5 =	250000
Less : Adjusted	(60000)
Less : Arrears	(1900)
	188100

WN 3 

Forfeiture of 500 shares issued to Adhar

Amount due on First and Final Call :  2 × 500 = 1000

Total amount due n First and Final Call : 2 × 49500 =	99000
Less : Adjusted	(1000)
Less : Arrears	98000

 

Share Forfeited on Ramesh's Share	2100
Proportionate Share Forfeiture on Adhar's Shares , `4000 xx 400/500` =	3200
	5300
Less : Loss on re-issue	(1800)
Profit on re-issue transferred to capital reserve	3500