Question

Sumit Machine Ltd. issued 50,000 shares of Rs. 100 each at a premium of 5%. The shares were payable Rs. 25 on application, Rs. 50 on allotment and Rs. 30 on the first and final call. The issue was fully subscribed, and money was duly received except for the final call on 400 shares. The premium was adjusted on allotment.

Give journal entries and prepare a balance sheet.

Answer 1

Journal Entries
Date	Particulars	L.F	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		12,50,000	-
	To Share Application A/c		-	12,50,000
	(Share Application money received on 50,000 shares @ ₹ 25 per share)
2.	Share Application A/c   ...Dr.		12,50,000	-
	To Share Capital A/c		-	12,50,000
	(Share Application money of 50,000 shares transferred to Share Capital Account)
3.	Share Allotment A/c   ...Dr.		25,00,000	-
	To Share Capital A/c		-	22,50,000
	To Securities Premium A/c		-	2,50,000
	(Share Allotment money due on 50,000 shares @ ₹ 45 each at a premium of ₹ 5)
4.	Bank A/c   ...Dr.		25,00,000	-
	To Share Allotment A/c		-	25,00,000
	(Allotment money received for 50,000 shares @ ₹ 50 per share)
5.	Share First and Final Call A/c   ...Dr.		15,00,000	-
	To Share Capital A/c		-	15,00,000
	(Share First and Final call due on 50,000 shares @ ₹ 30 per share)
6.	Bank A/c   ...Dr.		14,88,000	-
	Calls in Arrears A/c   ...Dr.		12,000	-
	To Share First and Final Call A/c		-	15,00,000
	(Share First and Final Call received except 400 shares)

 

Balance Sheet (Extract)
Particulars	Note no.	Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
Share Capital		52,38,000
II Assets
1. Cash and cash equivalents		52,38,000

Notes to Accounts:

Note No.	Particulars	Amount (₹)	Amount (₹)
1.	Share Capital:
	Authorised Capital:
	.......... Shares of ₹ 100 each
	Issued Capital:
	50,000 Equity Shares of ₹ 100 each		50,00,000
	Subscribed, Called-up & Paid-up Capital:
	50,000 Shares of ₹ 100 each, fully called up	50,00,000
	Less: Calls-in-Arrears (on 400 shares @ ₹ 30)	(12,000)	49,88,000
2.	Reserves and Surplus:
	Securities Premium Account		2,50,000
3.	Cash and Cash Equivalents:
	Cash at Bank		52,38,000