Question

The Mohan Ltd., has authorised capital of ₹5,00,000 divided into 50,000 shares of ₹10 each. The company issued a prospectus inviting applications for 30,000 shares of ₹10 each at a premium of ₹2 per share, payable as follows: On Application ₹3; On Allotment ₹5 (including premium); On First Call ₹2; On Second and Final Call ₹2.
The Company received applications for 45,000 shares and pro-rata allotment was made in respect of applications of 40,000 shares and the remaining applications were rejected. Money overpaid on applications was employed on account of sums due on allotment. All the calls were made.
B, to whom 300 shares were allotted failed to pay the two calls. The company decided to forfeit the shares allotted to B. These shares were subsequently re-issued to C as fully paid for ₹9 per share.
Prepare Cash Book and pass the necessary journal entries in the books of the company and prepare the Opening Balance Sheet.

Answer 1

Journal entries The Mohan Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c (45,000 × ₹3)     ...Dr.		1,35,000
	To share application A/c			1,35,000
	(Being Application money received)
2.	Share application A/c     ...Dr.		1,35,000
	To Share Capital A/c (30,000 × ₹3)			90,000
	To Share Allotment A/c (10,000 × ₹3)			30,000
	To Bank A/c (5,000 × ₹3)			15,000
	(Being Application money adjusted)
3.	Share Allotment A/c (30,000 × ₹5)     ...Dr.		1,50,000
	To Share Capital A/c (30,000 × ₹3)			90,000
	To Securities Premium Reserve A/c (30,000 × ₹2)			60,000
	(Being Allotment money due)
4.	Bank A/c (1,50,000 − 30,000)     ...Dr.		1,20,000
	To Share Allotment A/c			1,20,000
	(Being Allotment money received)
5.	Share 1st Call A/c (30,000 × ₹2)     ...Dr.		60,000
	To Share Capital A/c			60,000
	(Being 1st call money due)
6.	Bank A/c (29700 × ₹2)     ...Dr.		59,400
	To Share 1st Call A/c			59,400
	(Being 1st call money received except 300 shares)
7.	Share 2nd Call A/c (30,000 × ₹2)     ...Dr.		60,000
	To Share Capital A/c			60,000
	(Being 2nd call money due)
8.	Bank A/c (29,700 × ₹2)     ...Dr.		59,400
	To Share 2nd Call A/c			59,400
	(2nd call money received)
9.	Share Capital A/c (300 × ₹10)     ...Dr.		3,000
	To Share Forfeiture A/c (3,000 − 1,200)			1,800
	To Share 1st Call A/c (300 × ₹2)			600
	To Share 2nd Call A/c			600
	(Being 300 Shares forfeited due to non-payment of money)
10.	Bank A/c (300 × ₹9)     ...Dr.		2,700
	Share Forfeiture A/c (300 × ₹1)     ...Dr.		300
	To Share Capital A/c (300 × ₹10)			3,000
	(Being 300 forfeited shares were re-issued)
11.	Share Forfeiture A/c (1,800 − 300)     ...Dr.		1,500
	To Capital Reserve A/c			1,500
	(Being Balance of share forfeiture transfer to capital reserve A/c)

Note to Accounts:

		₹
1.	Share Capital
	a) Authorised Capital   ...Shares @ ₹10 each	-
	b) Issued capital   ...30,000 shares @ ₹10 each	3,00,000
	c) Subscribed Capital
	I. Subscribed and fully paid-up
	30,000 shares @ ₹10 each	3,00,000
	II. Subscribes but not fully paid-up	-
2.	Reserve and Surplus:
	Capital Reserve	1,500
	Securities Premium Reserve	60,000
		61,500
3.	Cash and Cash Equivalent
	Cash at Bank	3,61,500

 

Balance Sheet of Mohan Ltd.
Particulars	Note No.	₹
I. Equities and Liabilities:
1. Share Capital
a) Share Capital	1	3,00,000
b) Reserve and Surplus	2	61,500
Total		3,61,500
II. Assets
1. Current Assets
a) Cash and Cash Equivalent	3	3,61,500
Total		3,61,500