Question

A limited company offered for subscription of 1,00,000 equity shares of Rs 10 each at a premium of Rs 2 per share. 2,00,000. 10% Preference shares of Rs 10 each at par.

The amount on shares was payable as under:

	Equity Shares	Preference Shares
On Application	Rs. 3 per share	Rs. 3 per share
On Allotment	Rs. 5 per share (including premium)	Rs. 4 per share
On First Call	Rs. 4 per share	Rs. 3 per share

All the shares were fully subscribed, called-up and paid.

Record these transactions in the journal and cash book of the company:

Answer 1

Journal Entries in the books of A Ltd.
Date	Particulars	L.F	Debit (₹)	Credit (₹)
1.	Equity share application A/c   ...Dr.		3,00,000	-
	10% Preference share Application A/c   ...Dr.		6,00,000	-
	To Equity share capital A/c		-	3,00,000
	To 10% Preference share capital A/c		-	6,00,000
	(Application money transferred to share capital account for both pref. and equity shares)
2.	Equity shares allotment A/c   ...Dr.		5,00,000	-
	10% Preference share allotment A/c   ...Dr.		8,00,000	-
	To equity share capital A/c		-	3,00,000
	To securities premium reserve A/c		-	2,00,000
	To 10% Preference share capital A/c		-	8,00,000
	(Share allotment money due for both equity and preference shares)
3.	Equity share First & Final call A/c   ...Dr.		4,00,000	-
	10% Preference share First & Final call A/c   ...Dr.		6,00,000	-
	To Equity share capital A/c		-	4,00,000
	To 10% Preference share capital A/c
	(Share first and final call money due for both equity and preference shares)

 

Dr.	Cash Book (Bank column)						Cr.
Date	Particulars	J.F	Amount (₹)	Date	Particulars	J.F	Amount (₹)
	To Equity Share Application A/c		3,00,000		By  Balance c/d		32,00,000
	To 10% Preference Share Application A/c		6,00,000
	To Equity Share Allotment A/c		5,00,000
	To 10% Preference Share Allotment A/c		8,00,000
	To Equity Share First and Final Call A/c		4,00,000
	To 10% Preference Share First & Final Call A/c		6,00,000
			32,00,000				32,00,000