Question

Ajanta Ltd. issued a prospectus inviting applications for issuing 5,00,000 equity shares of ₹ 10 each issued at a premium of 10%. The amount was payable as follows:

On Application	₹ 3 per share
On Allotment (including premium)	₹ 5 per share
On First and Final Call	₹ 3 per share

Applications were received for 6,00,000 shares and pro rata allotment was made to all applicants. Excess money received on application was adjusted towards sums due on allotment. All amounts were duly received except from Sumit, who was the holder of 1,000 shares, and failed to pay the allotment and first and final call. His shares were forfeited.

Pass Journal entries for the above transactions in the books of Ajanta Ltd. Open Calls-in-Arrears Account wherever necessary.

Answer 1

Journal Entries in the Books of Ajanta Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		18,00,000
	To Shares Application A/c			18,00,000
	(Application money received on 6,00,000 shares @ ₹ 3 per share)
2.	Shares Application A/c   ...Dr.		18,00,000
	To Share Capital A/c			15,00,000
	To Shares Allotment A/c			3,00,000
	(Application money transferred and excess adjusted towards allotment)
3.	Shares Allotment A/c   ...Dr.		25,00,000
	To Share Capital A/c			20,00,000
	To Securities Premium A/c			5,00,000
	(Allotment money due @ ₹ 5 per share including premium ₹ 1)
4.	Bank A/c   ...Dr.		21,95,600
	Calls-in-Arrears A/c   ...Dr.		4,400
	To Shares Allotment A/c			22,00,000
	(Allotment money received except from Sumit)
5.	Shares First and Final Call A/c    ...Dr.		15,00,000
	To Share Capital A/c			15,00,000
	(First and Final Call due @ ₹ 3 per share)
6.	Bank A/c   ...Dr.		14,97,000
	Calls-in-Arrears A/c   ...Dr.		3,000
	To Shares First and Final Call A/c			15,00,000
	(First and Final Call received except from Sumit)
7.	Share Capital A/c   ...Dr.		10,000
	Securities Premium A/c   ...Dr.		1,000
	To Calls-in-Arrears A/c			7,400
	To Forfeited Shares A/c			3,600
	(Sumit's 1,000 shares forfeited for non-payment of allotment and First and Final Call)

Working Note:

Face value per share: ₹ 10

Premium: 10% of ₹ 10 = ₹ 1 per share

Amount payable:

Application = ₹ 3

Allotment = ₹ 5 (including premium ₹ 1)

First and Final Call = ₹ 3

1. Pro rata Allotment

6,00,000 : 5,00,000 =  6 : 5

Sumit was allotted 1,000 shares. Therefore, shares applied for by him:

`1,000 xx 6/5 = 1,200` shares

Application money paid by Sumit:

1,200 × ₹ 3 = ₹ 3,600

Application money required on 1,000 shares:

1,000 × ₹ 3 = ₹ 3,000

Excess application money adjusted towards allotment:

₹ 3,600 − ₹ 3,000 = ₹ 600

Allotment due:

1,000 × ₹ 5 = ₹ 5,000

Allotment money unpaid:

₹ 5,000 − ₹ 600 = ₹ 4,400

First and Final Call unpaid:

1,000 × ₹ 3 = ₹ 3,000

Amount credited to Forfeited Shares A/c:

₹ 3,600