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Y Ltd. Invited Applications for Issuing 80,000 Equity Shares of 10 Each at a Discount of 10%. the Amount Was Payable as Follows: Pass Necessary Journal Entries for the Above Transactions in the Books of Y Ltd. - CBSE (Arts) Class 12 - Accountancy

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Question

Y Ltd. invited applications for issuing 80,000 equity shares of 10 each at a discount of 10%. The amount was payable as follows:
On applications and allotment - Rs 6 per share
On first and final call - the balance amount
Application for 2,00,000 shares were received. Applications for 40,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. All money was received except on 1,600 shares applied by Rohan. His shares were forfeited. The forfeited shares were re-issued at the maximum discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of Y Ltd.

Solution

Journal Entries
Date Particulars L.F.

Debit

Rs

Credit

Rs

 

Bank A/c                Dr.

    To Share Application and Allotment A/c

(Being share application and allotment received on 2,00,000 of Rs 6 each including the discount of Rs 1 each )

 

12,00,000

 

 

 

12,00,000

 

 

 

Share Application and Allotment A/c      Dr.

Discount on Issue A/c       Dr. 

    To Share Capital A/c

    To Bank A/c

    To Share First and Final Call A/c

(Being share application of 80,000 shares transferred to share capital, share application and allotment on 40,000 shares refunded and rest is adjusted to share first and final call)

 

12,00,000

80,000

 

 

 

 

 

 

 

5,60,000

2,40,000

4,80,000

 

 

 

Share First and Final Call A/c     Dr.

    To Share Capital A/c

(Being share first and final call due on 80,000 shares of Rs 3 each)

 

2,40,000

 

 

 

2,40,000

 

Computation Table

Category Share
Applied
Share
Allotted
Money
received on
Application
and
Allotment
@ Rs 6 each
including
discount of
Rs 1 each
Money
transfers
to share
capital@
Rs 7 each
Money
transfer to
securities
premium@
Rs 1 each
Excess
Application
and
Allotment
money
Share first
and final
call due
@ Rs 3 each
Money
Refunded
I 40,000 Nil 2,40,000         2,40,000
II 1,60,000 80,000 9,60,000 5,60,000 80,000 4,80,000 2,40,000  
  2,00,000 80,000 12,00,000 5,60,000 80,000 4,80,000 2,40,000  

Working Note:

Those who applied for 1,60,000 shares, allotted = 80,000 Shares

Those who applied for 1,600 shares, allotted = `80000xx1600/160000`=- 800 share

Share Application and Allotment received on 1,600 shares of Rs 6 each (including the discount of Re 1 each) = Rs 9,600

Shares Allotted (800 x6) =Rs 4,800

Excess Application and Allotment money received = Rs 4,800

Share First and Final Call due on 800 shares of its 3 each = Rs 2,400

Excess Application and Allotment money received = Rs 4,800

Now, he has already paid an amount of Its 4,800 in excess at the time of application and allotment which is more than the amount due from him at the time of share final call. Thus, forfeiture is not possible in this case.

  Is there an error in this question or solution?

APPEARS IN

Solution Y Ltd. Invited Applications for Issuing 80,000 Equity Shares of 10 Each at a Discount of 10%. the Amount Was Payable as Follows: Pass Necessary Journal Entries for the Above Transactions in the Books of Y Ltd. Concept: Accounting Treatment of Forfeiture and Re-issue of Share.
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