Question
Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each. The amount was payable as follows :
On application and allotment - Rs 4 per share
On the first call - Rs 3 per share
On second and final call - balance
Application for 1,00,000 shares was received. Shares were allotted to all the applicants on pro-rata basis and excess money received with applications was transferred towards sums due on the first call. Vibha who was allotted 750 shares failed to pay the first call. Her shares were immediately forfeited.
Afterwards, the second call was made. The amount due on the second call was also received except on 1000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were re-issued to Mohit for Rs 9,000 as fully paid up.
Pass necessary journal entries in the books of Alfa Ltd. for the above transactions
Solution
| In the books of Alfa 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 1,00,000) |
4,00,000
|
4,00,000
|
||
|
Equity Share Application and Allotment A/c Dr. To Equity Share Capital A/c To Equity Share First Call A/c (Being amount of application transferred to Share Capital and excess money is adjusted in first call account) |
4,00,000
|
3,00,000 1,00,000
|
||
|
Equity Share First Call A/c Dr. To Equity Share Capital A/c (Being amount due on the first call) |
2,25,000
|
2,25,000
|
||
|
Bank A/c (2,25,000 – 1,00,000 – 1,250) Dr. To Equity Share First Call A/c (Being amount received on the first call) |
1,23,750
|
1,23,750
|
||
|
Equity Share Capital A/c Dr. To Equity Share Forfeiture A/c To Equity Share First Call A/c (Being Gupta’s shares forfeited) |
5,250
|
4,000 1,250
|
||
|
Equity Share Second and Final Call A/c Dr. To Equity Share Capital A/c (Being amount due on second and final call after Vibha’s |
2,22,750
|
2,22,750
|
||
|
Bank A/c (2,22,750 – 2,250) Dr. To Equity Share Second and Final Call A/c (Being amount received on second and final call) |
2,20,500
|
2,20,500
|
||
|
Equity Share Capital A/c Dr. To Equity Share Forfeiture A/c To Equity Share Second and Final Call A/c (Being Monika’s shares forfeited) |
7,500
|
5,250 2,250
|
||
|
Bank A/c Dr. Equity Share Forfeiture A/c Dr. To Equity Share Capital A/c (Being forfeited shares re-issued at `9000 share fully paid up) |
9,000 6,000
|
15,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount of forfeiture transferred to capital reserve) |
3,250
|
3,250
|
||
Working Notes :
WN1: Calculation of amount not received on First Call
Shares applied by Vibha = `100000/75000 xx 750 = 1,000 ` shares
Amount received on 1,000 shares of Rs 4 each = Rs 4,000
Amount transferred on 1,000 share capital A/c (750 x 4) = Rs 3,000
Excess money received on application and allotment = Rs 1,000
Amount due on first call @ Rs 3 each = Rs 2,250
Amount not received on first call = Rs 1,250 (2,250 – 1,000)
WN2: Calculation of Amount not received on Second Call
Shares allotted to Monika = `75000/100000 xx 1000` = 750 shares
Amount received on second call = Rs 2,250 (750 x 3)
