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Alfa Ltd. Invited Applications for Issuing 75,000 Equity Shares of Rs 10 Each Application for 1,00,000 Shares Was Received 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 - CBSE (Arts) Class 12 - Accountancy

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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
shares were forfeited)

 

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)

  Is there an error in this question or solution?

APPEARS IN

Solution Alfa Ltd. Invited Applications for Issuing 75,000 Equity Shares of Rs 10 Each Application for 1,00,000 Shares Was Received 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 Concept: Accounting Treatment of Forfeiture and Re-issue of Share.
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