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Question
Ashish Ltd. Invited applications for issuing 75,000 Equity Shares of Rs 10 each at a discount of 10%. The amount was payable as follows:
On Application Rs 2 per share.
On Allotment Rs 2 per share
On First and Final Call − Balance
Applications for 1,50,000 shares were received. Applications for 25,000 shares were rejected and the application money of these applicants was refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Suman who had applied for 1250 shares failed to pay allotment and first and final call money. Dev did not pay the first and final call on his 100 shares. All these share were forfeited and later on 1000 of these share were re-issued at Rs 17 per shares fully paid up. The re-issued shares included all the shares of Suman.
Pass necessary Journal Entries for the above transactions in the books of Ashish Ltd.
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Solution
|
Ashish Ltd. Journal |
|||||
|
Date |
Particulars |
|
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
3,00,000 |
|
|
|
To Share Application A/c |
|
|
|
3,00,000 |
|
|
(Application money received on 1,50,000 shares of Rs 2 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Application A/c |
Dr. |
|
3,00,000 |
|
|
|
To Share Capital A/c |
|
|
|
1,50,000 |
|
|
To Share Allotment A/c |
|
|
|
1,00,000 |
|
|
To Bank A/c |
|
|
|
50,000 |
|
|
(Application money adjusted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Allotment A/c |
Dr. |
|
2,25,000 |
|
|
|
Share Discount A/c |
Dr. |
|
75,000 |
|
|
|
To Share Capital A/c |
|
|
|
3,00,000 |
|
|
(Allotment money due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
1,23,750 |
|
|
|
To Share Allotment A/c |
|
|
|
1,23,750 |
|
|
(Allotment received i.e. 1,50,000 – 1,00,000 – 1,250) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share First and Final Call A/c |
Dr. |
|
3,00,000 |
|
|
|
To Share Capital A/c |
|
|
|
3,00,000 |
|
|
(Amount on first and final call due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
2,93,000 |
|
|
|
To Share First and Final Call A/c |
|
|
|
2,93,000 |
|
|
(Amount on First and Final Call due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Capital A/c (1,750 × 10) |
Dr. |
|
17,500 |
|
|
|
To Share Discount A/c |
|
|
|
1,750 |
|
|
To Share Forfeiture A/c |
|
|
|
7,500 |
|
|
To Share Allotment A/c |
|
|
|
1,250 |
|
|
To Share First and Call A/c |
|
|
|
7,000 |
|
|
(Share Forfeited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (1,000 × 17) |
Dr. |
|
17,000 |
|
|
|
To Share Capital A/c |
|
|
|
10,000 |
|
|
To Securities Capital A/c |
|
|
|
7,000 |
|
|
(Reissue of forfeited shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Forfeiture A/c |
|
|
3,750 |
|
|
|
To Capital Reserve A/c |
|
|
|
3,750 |
|
|
(Profit on reissue transferred to Capital Reserve) |
|
|
|
|
Notes
Working Notes
(1)
| Total Application money received (1,50,000 × 2) | 3,00,000 |
| Amount actually utilized in application (75,000 × 2) |
1,50,000 |
|
1,50,000 |
|
| (–) Money returned (25,000 × 2) | (50,000) |
| Utilized in allotment |
1,00,000 |
(2)
|
Total shares applied by Suman |
1,250 shares |
| No. of shares allotted to Suman | `(75,000)/(12,500)xx125` |
|
750 shares |
| Amount received on application from Suman (1,250 × 2) | 2,500 |
| (–) Actually utilized (750 × 2) | (1,500) |
| Amount unpaid on allotment |
1,250 |
| Allotment due on 750 shares (750 × 3) | 2,250 |
| Less: Excess money on application | (1,000) |
| Amount unpaid on allotment |
1,250 |
| Amount forfeited on 750 shares of Suman (1,250 × 2) | 2,500 |
|
Amount forfeited on 1,000 shares of Dev 5,000 (1,000 × 5) |
|
| ∴ Amount forfeited on 250 shares of Dev `((5,000)/(1,000)xx250)` | 1,250 |
| 3,750 | |
| Less: Amount forfeited on re-issue | Nil |
| Amount to be transferred to Capital Reserve |
3,750 |
