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Alfa Ltd. Invited Applications for Issuing 75,000 Equity Shares of ₹ 10 Each. the Amount Was Payable as Follows: - Accountancy

Journal Entry

Alfa Ltd. invited applications for issuing 75,000 equity shares of  ₹  10 each. The amount was payable as follows:

 On application and allotment      ₹ 4 per share ,
 On first Call     ₹  3 per share,
 On  second and final Call     balance.


Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due  on 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 second call was also received except on 1,000 shares applied by Monika . Her shares were also forfeited. All the forefited shares were reissued to Mohit for ₹9,000 as fully paid-up.
Pass necessary journal entries in the Books of Alfa Ltd .  for the above transactions.

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Solution

In the books of Alfa Ltd.
Journal Entry

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

4,00,000

 

 

  To Equity Share Application and Allotment A/c

 

 

 

4,00,000

 

(Application money received on 1,00,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application and Allotment A/c

Dr.

 

4,00,000

 

 

  To Equity Share Capital A/c

 

 

 

3,00,000

 

  To Equity Share First Call A/c

 

 

 

1,00,000

 

(Application money transferred to share capital account and excess money is adjusted in first call account)

 

 

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

2,25,000

 

 

To Equity Share Capital A/c

 

 

 

2,25,000

 

(Amount due on first call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,25,000 – 1,00,000 – 1,250)

Dr.

 

1,23,750

 

 

  To Equity Share First Call A/c

 

 

 

1,23,750

 

(Amount received on first call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

5,250

 

 

  To Equity Share Forfeiture A/c

 

 

 

4,000

 

  To Equity Share First Call A/c

 

 

 

1,250

 

(Vibha’s shares were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Second and Final Call A/c

Dr.

 

2,22,750

 

 

To Equity Share Capital A/c

 

 

 

2,22,750

 

(Amount due on second and final call after forfeiting Vibha’s shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,22,750 – 2,250)

Dr.

 

2,20,500

 

 

  To Equity Share Second and Final Call A/c

 

 

 

2,20,500

 

(Amount received on second and final call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

7,500

 

 

  To Equity Share Forfeiture A/c

 

 

 

5,250

 

  To Equity Share Second and Final Call A/c

 

 

 

2,250

 

(Monika’s shares were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,000

 

 

Equity Share Forfeiture A/c

Dr.

 

6,000

 

 

To Equity Share Capital A/c

 

 

 

15,000

 

(Forfeited shares were reissued for Rs 9,000 as fully paid-up)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c

Dr.

 

3,250

 

 

To Capital Reserve A/c

 

 

 

3,250

 

(Excess amount on forfeiture is transferred to capital reserve)

 

 

 

 

Working Notes:

WN1: Calculation of Amount not received on First Call 

Shares appied by Vibha =`100000 / 75000 = 1000 "Shares"`

Amount received on 1000 shares of Rs 4 each = Rs 4000

Amount transferred to share Capital A/c (750 × 4) = Rs 3000

Excess money received on application and allotment = Rs 1000

Amount due on first call @ Rs 3 each = Rs 2250

Amount not received on first call = Rs 1250 (2250 - 1000)

WN2: Calculation of Amount not received on Second Call  

Shares allotted to Monika = `75000/100000 xx 1000 = 750 "Shares"`

Amount not received on second call = Rs 2250 (750× 3)

  Is there an error in this question or solution?
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 1 Accounting for Share Capital
Exercise | Q 76 | Page 125
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