Question

Abhipra Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each. The shares were issued at a premium of ₹ 20 per share. The amount was payable as follows:

On Application	₹ 14 per share (including premium of ₹ 10),
On Allotment	₹ 8 per share (including premium of ₹ 5)
On First and Final Call	₹ 8 per share (including premium of ₹ 5)

Applications for 90,000 shares were received. Paresh, a shareholder holding 5,000 shares, did not pay the allotment money and call. While Dharam, holder of 3,000 shares, did not pay the call. Shares of Paresh and Dharam were forfeited. Of the forfeited shares, 5,000 shares including 3,000 shares of Paresh and 2,000 shares of Dharam were reissued to Parul at ₹ 8 per share as fully paid-up.

Pass necessary Journal entries for the above transactions in the books of Abhipra Ltd.

Answer 1

Journal Entries in the Books of Abhipra Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		12,60,000
	To Equity Shares Application A/c			12,60,000
	(Application money received on 90,000 shares @ ₹ 14 per share)
2.	Equity Shares Application A/c   ...Dr.		12,60,000
	To Equity Share Capital A/c			3,60,000
	To Securities Premium A/c			9,00,000
	(Application money transferred including premium ₹ 10 per share)
3.	Equity Shares Allotment A/c   ...Dr.		7,20,000
	To Equity Share Capital A/c			2,70,000
	To Securities Premium A/c			4,50,000
	(Allotment money due @ ₹ 8 per share including premium ₹ 5)
4.	Bank A/c   ...Dr.		6,80,000
	Calls-in-Arrears A/c   ...Dr.		40,000
	To Equity Shares Allotment A/c			7,20,000
	(Allotment money received except from Paresh)
5.	Equity Shares First and Final Call A/c   ...Dr.		7,20,000
	To Equity Share Capital A/c			2,70,000
	To Securities Premium A/c			4,50,000
	(First and Final Call due @ ₹ 8 per share including premium ₹ 5)
6.	Bank A/c   ...Dr.		6,56,000
	Calls-in-Arrears A/c   ...Dr.		64,000
	To Equity Shares First and Final Call A/c			7,20,000
	(First and Final Call received except from Paresh and Dharam)
7.	Equity Share Capital A/c   ...Dr.		50,000
	Securities Premium A/c   ...Dr.		50,000
	To Calls-in-Arrears A/c			80,000
	To Share Forfeiture A/c			20,000
	(Paresh's 5,000 shares forfeited for non-payment of allotment and call)
8.	Equity Share Capital A/c   ...Dr.		30,000
	Securities Premium A/c   ...Dr.		15,000
	To Calls-in-Arrears A/c			24,000
	To Share Forfeiture A/c			21,000
	(Dharam's 3,000 shares forfeited for non-payment of First and Final Call)
9.	Bank A/c   ...Dr.		40,000
	Share Forfeiture A/c   ...Dr.		10,000
	To Equity Share Capital A/c			50,000
	(5,000 forfeited shares reissued @ ₹ 8 per share as fully paid-up)
10.	Share Forfeiture A/c   ...Dr.		16,000
	To Capital Reserve A/c			16,000
	(Gain on reissue transferred to Capital Reserve)

Working Notes:

Face value per share: ₹ 10

Premium per share: ₹ 20

Amount payable:

Application: ₹ 14, including premium ₹ 10

Allotment: ₹ 8, including premium ₹ 5

First and Final Call: ₹ 8, including premium ₹ 5

Thus, capital portion:

Application:

₹ 14 − ₹ 10 = ₹ 4

Allotment:

₹ 8 − ₹ 5 = ₹ 3

First and Final Call:

₹ 8 − ₹ 5 = ₹ 3

1. Application Money

Applications received for 90,000 shares:

90,000 × ₹ 14 = ₹ 12,60,000

Share Capital:

90,000 × ₹ 4 = ₹ 3,60,000

Securities Premium:

90,000 × ₹ 10 = ₹ 9,00,000

2. Allotment Money

90,000 × ₹ 8 = ₹ 7,20,000

Paresh did not pay allotment on 5,000 shares:

5,000 × ₹ 8 = ₹ 40,000

Amount received:

₹ 7,20,000 − ₹ 40,000 = ₹ 6,80,000

3. First and Final Call

90,000 × ₹ 8 = ₹ 7,20,000

Unpaid by Paresh:

5,000 × ₹ 8 = ₹ 40,000

Unpaid by Dharam:

3,000 × ₹ 8 = ₹ 24,000

Total Calls-in-Arrears:

₹ 40,000 + ₹ 24,000 = ₹ 64,000

Amount received:

₹ 7,20,000 − ₹ 64,000 = ₹ 6,56,000

4. Forfeiture of Paresh's 5,000 Shares

Amount received towards capital = Application capital ₹ 4 per share:

5,000 × ₹ 4 = ₹ 20,000

Unpaid premium:

Allotment premium:

5,000 × ₹ 5 = ₹ 25,000

Call premium:

5,000 × ₹ 5 = ₹ 25,000

Total unpaid premium:

₹ 50,000

5. Forfeiture of Dharam's 3,000 Shares

Capital received per share:

₹ 4 + ₹ 3 = ₹ 7

Amount forfeited:

3,000 × ₹ 7 = ₹ 21,000

Unpaid premium on Call:

3,000 × ₹ 5 = ₹ 15,000

6. Reissue of 5,000 Shares

Reissued shares comprise:

Paresh = 3,000 shares

Dharam = 2,000 shares

Cash received:

5,000 × ₹ 8 = ₹ 40,000

Share Capital credited:

5,000 × ₹ 10 = ₹ 50,000

Discount on reissue:

₹ 50,000 − ₹ 40,000 = ₹ 10,000

Forfeited amount relating to Paresh's 3,000 reissued shares:

3,000 × ₹ 4 = ₹ 12,000

Forfeited amount relating to Dharam's 2,000 reissued shares:

2,000 × ₹ 7 = ₹ 14,000

Total:

₹ 12,000 + ₹ 14,000 = ₹ 26,000

Capital Reserve:

₹ 26,000 − ₹ 10,000 = ₹ 16,000