Question

'Amrit Dhara Ltd.' invited applications for issuing 80,000 equity shares of Rs 10 each. The amount was payable as follows:

On application and allotment - Rs 2 per share
On the first call - Rs 4 per share
On the second and final call the balance

Applications for 1,00,000 shares were received. Shares were allotted on pro-rata basis to all the
applicants. Excess money received with applications was adjusted towards sums due on the first call. Manohar who had applied for 2,000 shares failed to pay the first call and his shares were immediately forfeited. Afterwards, a second and final call was made. Mahan who was allotted 2,400 shares failed to pay the second and final call. His shares were also forfeited. All the forfeited shares were re-issued at Rs 9 per share as fully paid up.

Pass necessary Journal Entries in the books of the company for the above transactions

Answer 1

In the books of Amrit Dhara 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)		2,00,000	2,00,000
	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)		2,00,000	1,60,000 40,000
	Equity Share First Call A/c   Dr     To Equity Share Capital A/c (Being amount due on the first call)		3,20,000	3,20,000
	Bank A/c (3,20,000 – 40,000 – 5,600)   Dr.    To Equity Share First Call A/c (Being amount received on the first call)		2,74,400	2,74,400
	Equity Share Capital A/c      Dr.     To Equity Share Forfeiture A/c     To Equity Share First Call A/c (Being Manohar shares forfeited)		9,600	4,000 5,600
	Equity Share Second and Final Call A/c   Dr.    To Equity Share Capital A/c (Being amount due on second and final call after forfeiting Manohar’s shares)		3,13,600	3,13,600
	Bank A/c (3,13,600 – 9,600)     Dr.    To Equity Share Second and Final Call A/c (Being amount received on second and final call)		3,04,000	3,04,000
	Equity Share Capital A/c   Dr.    To Equity Share Forfeiture A/c    To Equity Share Second and Final Call A/c (Being Mahan’s shares were forfeited)		24,000	14,400 9,600
	Bank A/c     Dr. Equity Share Forfeiture A/c   Dr    To Equity Share Capital A/c (Being forfeited shares re-issued at Rs 9 share fully paid up)		36,000 4,000	40,000
	Equity Share Forfeiture A/c  Dr.     To Capital Reserve A/c (Being excess amount of forfeiture transferred to capital reserve)		14,400	14,400

Working Notes:

WN1:: Calculation of amount not received on First Call

Shares applied by Manohar = `80000/100000 xx 2000` = 1600 share

Amount received on 2,000 shares of 2 each = 2,000
Amount transferred on 1,000 share capital A/c (1,600 x 2) = 3,200
Excess money received on application and allotment = 800
Amount due on first call @ 4 each = 6,400
Amount not received on first call = 5,600 (6,400 - 800)

WN2: Calculation of Amount not received on Second Call

Amount Not received on second call = 9,600 (2,400 x 4)