Question

Vikram Ltd. issued 50,000 shares of ₹10 each at a premium of ₹1 per share payable as follows:

• ₹3 on Application
• ₹4 on Allotment (including premium)
• ₹2 on 1st Call
• Balance when required

Applications were received for 46,000 shares and all of these were accepted. Directors did not make the final call. A shareholder holding 800 shares did not pay the amount due on first call. The shares were forfeited and re-issued at ₹7 per share, ₹8 per share paid.
Pass Cash Book and Journal Entries.

Answer 1

Cash Book (Bank Column Only)

In the books of Vikram Ltd.
Receipts	Amount
Application Money (46,000 × 3)	1,38,000
Allotment Money (46,000 × 4)	1,84,000
First Call (46,000 − 800 = 45,200 × 2)	90,400
Reissue of Forfeited Shares (800 × Rs. 7)	5,600
Total	4,18,000

 

Journal entries  In the books of Vikram Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		1,38,000
	To Share Application A/c			1,38,000
	(Received application money on 46,000 shares)
2.	Share Application A/c     ...Dr.		1,38,000
	To Share Capital A/c			1,38,000
	(Application money transferred to share capital)
3.	Share Allotment A/c     ...Dr.		1,84,000
	To Share Capital A/c			1,38,000
	To Securities Premium A/c			46,000
	(Allotment money due including premium)
4.	Bank A/c     ...Dr.		1,84,000
	To Share Allotment A/c			1,84,000
	(Allotment money received)
5.	Share First Call A/c     ...Dr.		92,000
	To Share Capital A/c			92,000
	(First call money due on 46,000 shares)
6.	Bank A/c     ...Dr.		90,400
	Calls in Arrears A/c     ...Dr.		1,600
	To Share First Call A/c			92,000
	(First call money received except on 800 shares)
7.	Share Capital A/c (800 × ₹8)     ...Dr.		6,400
	To Share Forfeiture A/c (800 × Rs. 6)			4,800
	To Calls in Arrears A/c (800 × Rs. 2)			1,600
	(800 shares forfeited for non-payment of first call)
8.	Bank A/c (800 × ₹7)     ...Dr.		5,600
	Share Forfeiture A/c (800 × Rs. 1)     ...Dr.		800
	To Share Capital A/c (800 × Rs. 8)			6,400
	(Reissued 800 forfeited shares at Rs. 7 each, Rs. 8 paid-up)
9.	Share Forfeiture A/c     ...Dr.		4,000
	To Capital Reserve A/c			4,000
	(Balance of forfeiture transferred to Capital Reserve)

Working Notes:

1) Shares issued = 50,000
Shares applied for and allotted = 46,000

2) Share Amount Called (per share):

• Application = ₹3

• Allotment = ₹4 (₹3 Capital + ₹1 Premium)

• First Call = ₹2

• Final Call = Not made
  Total called-up = ₹3 + ₹3 + ₹2 = ₹8 per share

3) First Call Defaulter:
800 shares not paid on first call
Amount unpaid = 800 × ₹2 = ₹1,600

4) Paid on 800 shares = ₹3 (App.) + ₹3 (Cap. part of Allot.) = ₹6
Forfeiture amount = 800 × ₹6 = ₹4,800

5) Re-issue:

• 800 forfeited shares reissued at ₹7 per share, as ₹8 paid-up

• Discount = ₹1 per share

• Discount = 800 × ₹1 = ₹800

• Profit transferred to Capital Reserve = ₹4,800 – ₹800 = ₹4,000