Question

'X Ltd.' invited applications for issuing 10,000 equity shares of  Rs 100 each at a premium of Rs 100 per share. The amount was payable as follows:

On application and allotment - Rs 100 per share (including Rs 50 premium)
On first and final call - The balance

The issue was fully subscribed. A shareholder holding 500 shares paid the full share money with an application. Another shareholder holding 200 shares failed to pay the first and final call money. His shares were forfeited. The forfeited shares were re-issued for Rs 19,000 as fully paid up.

Pass necessary journal entries for the above transactions in the books of the company

Answer 1

In the books of X Ltd Journal Entry
Date	Particulars	L.F.	Dr. Rs	Cr. Rs
	Bank A/c    Dr.     To Equity Share Application and Allotment A/c (Being amount received on an application for 10,000 shares along with first call money on 500 shares)		10,50,000	10,50,000
	Equity Share Application and Allotment A/c  Dr.       To Equity Share Capital A/c       To Securities Premium A/c        To Calls-in-Advance A/c (Being amount of application transferred to Share Capital and securities premium)		10,50,000	5,00,000 5,00,000 50,000
	Equity Share First Call A/c   Dr.     To Equity Share Capital A/c     To Securities Premium A/c (Being amount due on the first call)		10,00,000	5,00,000 5,00,000
	Bank A/c (10,00,000 – 50,000 – 20,000)    Dr. Calls – in – Advances A/c      Dr.     To Equity Share First Call A/c (Being amount received on share first call)		9,30,000 50,000	9,80,000
	Equity Share Capital A/c    Dr. Securities Premium A/c     Dr.     To Equity Share Forfeiture A/c     To Equity Share First Call A/c (Being 200 shares forfeited)		20,000 10,000	10,000 20,000
	Bank A/c     Dr. Equity Share Forfeiture A/c     Dr     To Equity Share Capital A/c (Being forfeited shares were reissued for Rs 4,000)		19,000 1,000	20,000
	Equity Share Forfeiture A/c    Dr.     To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital reserve)		9,000	9,000

Working Notes:

WN1: Calculation of Amount received on Application

Application amount received on 10,000 shares = 10,00,000

Shareholders of 500 shares paid in advance (500 x 100) = 50,000

Total amount = 10,50,000