Question

Vani Limited invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of 10%. The amounts were payable as under: On Application and Allotment - ₹ 4 per share (including premium ₹ 1)

On first call -₹ 4 per share

On second and final call - ₹ 3 per share

Applications for1,50,000 shares were received and pro-rata allotment was made to all the applicants. Excess application money was adjusted towards sums due on calls. Parth, a shareholder who had applied for 600 shares did not pay the first call. His shares were forfeited. The second and final call was not yet made. Half of the forfeited shares were reissued at ₹ 8 per share fully paid-up.

Journalise the above transactions in the books of Vani Limited by opening calls in arrears and calls in advance account wherever necessary.

Answer 1

In the Books of Vani Limited Journal
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c (1,50,000 x 4)       ...Dr.		6,00,000
	To Equity Share Application & Allotment A/c			6,00,000
	(Being application and allotment money received for 1,50,000 shares)
2.	Equity Share Application & Allotment A/c       ...Dr.		6,00,000
	To Equity Share Capital A/c (1,00,000 x 3)			3,00,000
	To Securities Premium Reserve A/c (1,00,000 × 1)			1,00,000
	To Equity Share First Call A/c			2,00,000
	(Being 1,00,000 equity shares allotted and excess amount credited to share first call account)
3.	Equity Share First Call A/c   ...Dr.		4,00,000
	To Equity Share Capital A/c			4,00,000
	(Being first call money due on 1,00,000 shares)
4.	Bank A/c           ...Dr.		1,99,200
	Calls in Arrears A/c       ...Dr.		800
	To Equity Share First Call A/c			2,00,000
	(Being first call money received on 99,600 shares)
5.	Equity Share Capital A/c (400 × ₹7)     ...Dr.		2,800
	To Calls in Arrears A/c			800
	To Share Forfeiture A/c			2,000
	(Being 400 shares of Parth forfeited for non-payment of first call money)
6.	Bank A/c (200 × ₹ 8)     ...Dr.		1,600
	Share Forfeiture A/c (200 × ₹ 2)      ...Dr.		400
	To Equity Share Capital A/c (200 × ₹10)			2,000
	(Being reissue of 200 shares @ ₹8 per share fully paid-up)
7.	Share Forfeiture A/c      ...Dr.		600
	To Capital Reserve A/c			600
	(Being profit on reissue of 200 forfeited shares transferred to Capital Reserve Account)

Working Note:

(i) Calculation of Excess Amount Received from Parth on Application & Allotment:

Shares Applied by Parth = 600 shares

Shares Allotted to Parth = `(1,00,000)/(1,50,000)xx600= 400`shares

Excess Application & Allotment Money Received from Parth

= (600 shares - 400 shares) × ₹4

200 shares ×  ₹4

=  ₹800

(ii)

Calculation of Amount Not Received from Parth in First Call:
Amount due on First Call (400 shares × ₹4)	₹1,600
Less: Excess Money Received from Parth on Application & Allotment	₹ 800
First call money not received from Parth	₹ 800

(iii)

Calculation of Amount Received on First Call:
Total Amount Due to First Call (1,00,000 shares x ₹ 4)	₹ 4,00,000
Less: Excess Amount Received on Application & Allotment	₹ 2,00,000
Balance Due	₹ 2,00,000
Less: First Call Money not received from Parth	₹ 800
Amount Received on First Call	₹ 1,99,200

(iv) Calculation of Amount to be transferred to Capital Reserve:

Profit on 400 shares = ₹ 2,000

Profit on 200 shares = `₹ 2,000 xx (200)/400 `

= ₹ 1,000

Loss on Reissue of 200 shares = 200 × ₹ 2 =  ₹ 400

Profit on Reissue transferred to Capital Reserve = ₹ 1,000 - ₹ 400

= ₹ 600