Question

Shyam Ltd. invited applications for issuing 80,000 Equity Shares of Rs 10 each at a premium of Rs 40 per share. The amount was payable as follows:  

On Application Rs 35 per share (including Rs 30 Premium)

On Allotment Rs 8 per share (including Rs 4 Premium)

On First and Final Call − Balance

Applications for 77,000 shares were received. Shares were allotted to all the applicants. Sundram to whom 7,000 shares were allotted failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the first and final call was made. Satyam the holder of 500 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 1,000 shares were re-issued at Rs 50 per share fully paid up. The re-issued shares included all the shares of Satyam.

Pass necessary Journal Entries for the above transactions in the books of Shyam Ltd.

Answer 1

Book of Shaym Ltd.                                  Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c To Share Application (Share Application received for 77,000 shares at Rs 35 per share)   Share Application A/c To Equity Share Capital A/c To Securities Premium A/c (Share Application of 77,000 shares transferred to equity share capital and securities premium)   Share Allotment A/c To Equity Share Capital A/c To Securities Premium A/c (Share Allotment due on 77,000 shares)   Bank A/c Calls-in-Arrears A/c To Share Allotment A/c (Share allotment received from all allotted shares except 7,000 shares)   Equity Share Capital A/c Securities Premium A/c To Share Forfeiture A/c To Calls-in-Arrears A/c (7,000 shares Rs 9 called-up forfeited for the non-payment of allotment)   Share First and Final Call A/c To Equity Share Capital A/c To Securities Premium A/c (Share first and final call due on 70,000 shares)   Bank A/c Calls in Arrears A/c To Share First and Final Call A/c (Share First and Final Call received on all shares except 500 shares)   Equity Share Capital A/c Securities Premium A/c To Share Forfeiture A/c To Calls in Arrears A/c (500 Shares forfeited for the no non-payment of First and Final Call)   Bank A/c To Equity Share Capital A/c To Securities Premium A/c (1,000 shares of Rs 10 each re-issued at premium of Rs 40 per share)   Share Forfeiture A/c To Capital Reserve A/c (Share forfeiture of 1,000 shares transferred to Capital Reserve)	Dr.           Dr.             Dr.         Dr. Dr.         Dr. Dr.           Dr.           Dr. Dr.         Dr. Dr.           Dr.           Dr.		26,95,000         26,95,000             6,16,000         5,60,000 56,000         63,000 28,000           4,90,000           486,500 3,500         5,000 3,000           50,000           7,000	26,95,000         3,85,000 23,10,000           3,08,000 3,08,000         6,16,000           35,000 56,000         70,000 4,20,000           4,90,000           4,500 3,500         10,000 40,000         7,000

Satyam Shares

Share Forfeiture	Rs 9	Credit per share
Share Forfeiture on reissue	Nil	Debit per share
	Rs 9	Credit

Capital Reserve of 500 share of Satyam

= 500 × Share forfeiture per share

= 500 × 9

= Rs 4,500

Sundram

Share Forfeiture	Rs 5	Credit per share
Share Forfeiture on reissue	Nil	Debit per share
	Rs 5	Credit per share

Capital Reserve of 500 shares = Share forfeiture × No. of share reissue

= 5 × 500

= Rs 2,500

 

Total amount transferred to Capital Reserve for 1,000 shares

= Rs 4,500 + 2,500

= Rs 7,000