CBSE (Arts) Class 12CBSE
Share
Notifications

View all notifications

Xyz Ltd. Invited Applications for 40,000 Equity Shares of Rs.100 Each at a Discount of 6%. the Amount Was Payable as Follows: on Application and Allotment - Rs.90 per Share on First and Final Call - the Balance Amount. Applications for 60,000 Shares Were Received. - CBSE (Arts) Class 12 - Accountancy

Login
Create free account


      Forgot password?

Question

XYZ Ltd. invited applications for 40,000 equity shares of Rs.100 each at a discount of 6%. The amount was payable as follows:

On Application and Allotment - Rs.90 per share

On First and Final call - the balance amount.

Applications for 60,000 shares were received. Applications for 10,000 shares were rejected and shares were allotted on pro-rata basis to remaining applicants. Excess application money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. A shareholder, who applied for 50 share, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were re-issued at Rs.97 per share fully paid up. Pass necessary journal entries for the above transactions in the books of XYZ Ltd.

Solution

                                                                                              Journal Entries

Date Particulars L.F. Debit (Rs.) Credit (Rs.)
 

Bank A/c                               Dr.

        To Equity Share Application and Allotment A/c

(Being application money received on 60,000 shares)

 

Share Application and Allotment A/c        Dr.

Discount on Issue of Share A/c              Dr.

             To Equity share capital A/c

             To Equity share First and Final Call A/c

             To Bank A/c

(Being application and allotment money is transferred adjusted and the refund is done)

 

Equity Share First and Final Call A/c            Dr.

              To Equity share capital A/c

(Being first call due on 40,000 shares)

 

54,00,000

 

 

 

54,00,000

2,40,000

 

 

 

 

 

1,60,000

 

 

 

54,00,000

 

 

 

 

38,40,000

1,60,000

16,40,000

 

 

 

1,60,000

 

Important Note: This question can't be solved further because the shar ehold er has already paid excess amount than required on first and final call as he has applied for 50 shares and 40 shares are allotted to him `[40000/50000xx50=40]`

Calculation of excess amount received from him

Amount received =50 × 90                                          = Rs.4,500

     Less: Amount that is to be received= 40 × 90           = Rs.3,600   

Excess money received                                                = Rs.900

Amount due on first and final call = 40 x 4 = Rs.160

Now, he has already paid the amount of its 900 in excess at the time of application and allotment. Thus, forfeiture is not possible in this case.

Thus, this question has incomplete or wrong information, hence, cannot be solved fully.

 

Amount paid by 50,000 shares                         = Rs.45,00,000

   Less: Amount that is required to be paid         = Rs.36,00,000   

Excess Application money received                   =   Rs.9,00,000

    Less: Amount due on first and final call          =   Rs.1,60,000   

Amount refunded through bank                         =   Rs.7,40,000

Add: Amount to be refunded                             =   Rs.9,00,000   

Total                                                               =  Rs.16,40,000

  Is there an error in this question or solution?
Solution Xyz Ltd. Invited Applications for 40,000 Equity Shares of Rs.100 Each at a Discount of 6%. the Amount Was Payable as Follows: on Application and Allotment - Rs.90 per Share on First and Final Call - the Balance Amount. Applications for 60,000 Shares Were Received. Concept: Accounting Treatment of Forfeiture and Re-issue of Share.
S
View in app×