Question

Shuchi Ltd. was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20,000 such shares at a premium of ₹ 2 per share, payable as ₹ 2 per share on application, ₹ 5 per share on allotment (including premium) and ₹ 2 per share on first call made three months later. All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares and another shareholder holding 1,000 shares failed to pay the first call money.

Pass Journal entries to record the above transactions and show how they will be shown in the company's Balance Sheet.

Answer 1

Journal Entries in the Books of Shuchi Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		40,000
	To Shares Application A/c			40,000
	(Application money received on 20,000 shares @ ₹ 2 per share)
2.	Shares Application A/c   ...Dr.		40,000
	To Share Capital A/c			40,000
	(Application money transferred to Share Capital)
3.	Shares Allotment A/c   ...Dr.		1,00,000
	To Share Capital A/c			60,000
	To Securities Premium A/c			40,000
	(Allotment money due @ ₹ 5 per share including premium ₹ 2 per share)
4.	Bank A/c   ...Dr.		1,00,000
	To Shares Allotment A/c			1,00,000
	(Allotment money received)
5.	Shares First Call A/c   ...Dr.		40,000
	To Share Capital A/c			40,000
	(First call money due on 20,000 shares @ ₹ 2 per share)
6.	Bank A/c   ...Dr.		38,900
	Calls-in-Arrears A/c   ...Dr.		2,000
	To Shares First Call A/c			40,000
	To Calls-in-Advance A/c			900
	(First call money received except on 1,000 shares and balance amount received in advance on 300 shares)

Working Note:

1. Securities Premium:

20,000 × ₹ 2 = ₹ 40,000

2. First Call due:

20,000 × ₹ 2 = ₹ 40,000

3. Calls-in-Arrears:

1,000 × ₹ 2 = ₹ 2,000

4. Balance remaining after First Call:

Total issue price:

₹ 10 + ₹ 2 = ₹ 12

Amount due up to First Call:

₹ 2 + ₹ 5 + ₹ 2 = ₹ 9

Balance:

₹ 12 − ₹ 9 = ₹ 3 per share

Calls-in-Advance on 300 shares:

300 × ₹ 3 = ₹ 900

5. Bank amount received on First Call:

₹ 40,000 − ₹ 2,000 + ₹ 900 = ₹ 38,900

Balance Sheet
Particulars	Note No.	₹
EQUITY AND LIABILITIES
Shareholders' Funds
Share Capital	1	1,38,000
Reserves and Surplus: Securities Premium		40,000
Current Liabilities
Calls-in-Advance		900
Total		1,78,900

 

Notes to Accounts
Particulars	₹
Note 1: Share Capital
Authorised Capital:
50,000 Equity Shares of ₹ 10 each	5,00,000
Issued Capital:
20,000 Equity Shares of ₹ 10 each	2,00,000
Subscribed but Not Fully Paid-up Capital:
20,000 Equity Shares of ₹ 10 each, ₹ 7 called-up	1,40,000
Less: Calls-in-Arrears (1,000 × ₹ 2)	(2,000)
Total Share Capital	1,38,000