Question

A limited Company was registered with a capital of ₹5,00,000 in shares of ₹10 each and issued 20,000 such shares at a premium of ₹2 per share, payable as ₹3 per share on application, ₹4 per share on allotment (including premium) and ₹2 per share on first call made three months later. All the money payable on application and allotment were duly received but when the first call was made, one shareholder paid the entire balance on his holdings of 300 shares, and another shareholder holding 1,000 shares failed to pay the first call money.
Give Journal entries to record the above transactions and show how they will appear in the company's Balance Sheet.

Answer 1

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c (20000*3)     ...Dr.		60,000
	To Share Application A/c			60,000
	(Application money received)
2.	Share Application A/c     ...Dr.		60,000
	To Share Capital A/c			60,000
	(Application money transferred to share capital)
3.	Share Allotment A/c (20000*4)     ...Dr.		80,000
	To Share Capital A/c (20000*2)			40,000
	To Securities Premium A/c (20000*2)			40,000
	(Allotment made due)
4.	Bank A/c     ...Dr.		80,000
	To Share Allotment A/c			80,000
	(Allotment money received)
5.	Share First Call A/c (20000*2)     ...Dr.		40,000
	To Share Capital A/c			40,000
	(First Call made due)
6.	Bank A/c WN1     ...Dr.		38,900
	Calls in Arrears A/c     ...Dr.		2000
	To Share First Call A/c			40,000
	To Calls in Advance A/c			900
	(First call money received, 300 shares paid in advance, 1000 shares did not pay the first call)

Working Notes:

1.

Amount Received on First Call
Amount Due on First call	40000
Less: Calls in Arrears - 1000*2	2000
Add: Amount Received in Advance - 300*3	900
	38,900

Extract of Balance Sheet

	₹
1 Share Capital
Authorised Capital
50000 shares of ₹10 each	5,00,000
Issued Capital
20000 shares of ₹10 each	2,00,000
Subscribed Capital:
Subscribed and Fully Paid Capital
Subscribed but not Fully Paid Capital
20000 shares of 10 each, Paid up 7: 1,40,000
Less: Calls in arrears: 2000	1,38,000
	1,38,000
2. Reserve and Surplus
Securities Premium	40,000
3. Other Current Liabilities
Calls in Advance	900
3. Cash and Bank Balance
Cash at Bank	1,78,900

Notes to Accounts

Particulars	Note No.	Amount Current Year ₹	Amount Previous Year ₹
I. Equity and Liabilities
Shareholders Funds
(a) Share Capital	1	1,38,000
(b) Reserve and Surplus	2	40,000
Current Liabilities
Other Current Liabilities	3	900
II. Assets
Current Assets
(a) Cash and Bank Balance	4	1,78,900