Question

X Ltd. issued a prospectus offering 2,00,000 shares of ₹10 each at ₹14 per share, payable as follows:

On Application	₹4
On Allotment	₹6 (including premium ₹4)
On First Call	₹3
On Final Call	Balance

Dinesh, the holder of 1,000 shares, did not pay the amount due on allotment and first call. His shares were forfeited and 400 of these shares were immediately re-issued credited ₹9 paid for ₹8.40 per share.
Final call was made afterwards and it was duly received.
Show entries in the Cash Book and the Journal of the company. Also prepare the Opening Balance Sheet.

Answer 1

Cash Book (Bank Column Only)

Particulars	Amount (₹)
Application (2,00,000 × ₹4)	8,00,000
Allotment (2,00,000 × ₹6)	12,00,000
First Call (2,00,000 × ₹3)	6,00,000
Final Call (2,00,000 × ₹1)	2,00,000
Re‑issue of 400 shares (₹8.40)	3,360
Total	27,93,360

 

Journal entries  In the books of X Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		8,00,000
	To Share Application A/c			8,00,000
	(Application money received)
2.	Share Application A/c     ...Dr.		8,00,000
	To Share Capital A/c (2,00,000 × ₹10)			20,00,000
	To Securities Premium A/c (2,00,000 × ₹4)			8,00,000
	(Application money adjusted)
3.	Share Allotment A/c     ...Dr.		12,00,000
	To Share Capital A/c (2,00,000 × ₹6)			12,00,000
	(Allotment due)
4.	Bank A/c     ...Dr.		11,00,000
	Calls in Arrears A/c (Dinesh – ₹1,000 × ₹6)     ...Dr.		6,000
	To Share Allotment A/c			12,00,000
	(Allotment received except D’s 6,000 dues)
5.	Share First Call A/c     ...Dr.		6,00,000
	To Share Capital A/c			6,00,000
	(First Call due @ ₹3)
6.	Bank A/c     ...Dr.		5,94,000
	Calls in Arrears A/c (D’s ₹1,000×₹3)     ...Dr.		3,000
	To Share First Call A/c			5,97,000
	(First Call received except from Dinesh)
7.	Share Final Call A/c     ...Dr.		2,00,000
	To Share Capital A/c			2,00,000
	(Final Call due ₹1)
8.	Bank A/c     ...Dr.		2,00,000
	To Share Final Call A/c			2,00,000
	(Final Call received)
9.	Share Capital A/c     ...Dr.		10,000
	To Calls in Arrears A/c (D’s unpaid ₹9,000 + ₹6,000 + ₹3,000)			18,000
	To Share Forfeiture A/c (1,000 shares × ₹8 paid)			8,000
	(Forfeiture of Dinesh’s 1,000 shares)
10.	Bank A/c     ...Dr.		3,360
	Share Forfeiture A/c     ...Dr.		640
	To Share Capital A/c (400 × ₹10)			4,000
	To Securities Premium A/c (400 × ₹0.40)			160
	(Re‑issue of 400 shares @ ₹8.40 as ₹10 fully paid)
11.	Share Forfeiture A/c     ...Dr.		2,400
	To Capital Reserve A/c			2,400
	(Balance in forfeiture transferred to capital reserve)

Balance Sheet (Extract)

Particulars	Note No.	Amount (₹)
Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital	1	27,93,360

Notes to Accounts

Note 1: Share Capital

Particulars	Amount (₹)
Authorised: 2,00,000 Equity Shares of ₹10	20,00,000
Issued, Subscribed & Called-up: 2,00,000 × ₹10	20,00,000
Add: Securities Premium (per share ₹4)	8,00,000
Total Subscribed Capital	28,00,000
Less: Calls in Arrears (Dinesh’s 1,000 shares unpaid ₹9 each)	(9,000)
Less: Capital Reserve transferred	(2,400)
Net Share Capital (as per B/S)	27,88,600
Add: Capital Reserve	2,400
Total Shareholders’ Funds	27,93,000