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'Blur Star Ltd.' Was Registered with an Authorized Capital of Rs 2,00,000 Divided into 20,000 Shares of Rs 10 Each. - Accountancy

Journal Entry

'Blur Star Ltd.' was registered with an authorized capital of Rs 2,00,000 divided into 20,000 shares of Rs 10 each. 6,000 of these shares were issued to the vendor for building purchased. 8,000 shares were issued to the public and Rs  5 per share were called up as follows:

On application - Rs 2 per share
On allotment - Rs 1 per share
On the first call - Balance of the called up amount

The amounts received on these shares were as follows:
On 6,000 shares - Full amount called
On 1,250 shares - Rs 3 per share
On 750 shares - Rs 2 per share

The directors forfeited 750 shares on which Rs 2 per share were received.
Pass necessary journal entries for the above transactions in the books of Blue Star Ltd

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Solution

In the Books of Blue Star Ltd
Journal
Date Particulars L.F

Dr.

Rs

Cr.

Rs

 

Building A/c   Dr.

   To Vendor A/c

(Being machinery purchased)

 

60,000

 

 

 

60,000

 

 

Vendor A/c   Dr.

   To Equity Share Capital A/c

(Being issued 6,000 shares to the vendor of machinery)

 

60,000

 

 

 

60,000

 

 

Bank A/c   Dr.

    To Equity Share Application A/c

(Being application money received on 8,000 shares)

 

16,000

 

 

 

16,000

 

 

Equity Share Application A/c  Dr.

    To Equity Share Capital A/c

(Being amount of application transferred to Share Capital)

 

16,000

 

 

 

16,000

 

 

Equity Share Allotment A/c    Dr.

    To Equity Share Capital A/c

(Being amount due on share allotment)

 

8,000

 

 

 

8,000

 

 

Bank A/c (8,000 – 750)    Dr.

   To Equity Share Allotment A/c

(Being amount received on share allotment)

 

7,250

 

 

 

7,250

 

 

Equity Share First Call A/c     Dr.

   To Equity Share Capital A/c

(Being amount due on share first call)

 

16,000

 

 

 

16,000

 

 

Bank A/c (16,000 – 2,500 – 1,500)   Dr.

    To Equity Share First Call A/c

(Being amount received on share first call)

 

12,000

 

 

 

12,000

 

 

Equity Share Capital A/c    Dr.

      To Equity Share forfeiture A/c

      To Equity Share Allotment A/c

      To Equity Share first, call A/c

(Being 750 shares forfeited)

 

3,750

 

 

 

 

 

1,500

750

1,500

 

Concept: Accounting Treatment of Forfeiture and Re-issue of Share
  Is there an error in this question or solution?
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