'BMY Ltd.' invited applications for issuing 1,00,000 equity shares of Rs 10 each at a premium of `10 per share. The amount was payable as follows :
On application - Rs 10 per share (including Rs 5 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 300 shares paid the full share money with
an application. Another shareholder holding 200 shares failed to pay the allotment money. His shares were forfeited. Later on, these shares were re-issued for Rs 4,000 as fully paid up.
Pass necessary journal entries for the above transaction in the books of BMY Ltd.
Solution
| In the books of BMY 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 shares along with allotment money on 300 shares) |
10,03,000
|
10,03,000
|
||
|
Equity Share Application and Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c To Calls-in-Advance A/c (Being amount of application transferred to Share Capital and securities premium) |
10,03,000
|
5,00,000 5,00,000 3,000
|
||
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being amount due on allotment) |
10,00,000
|
5,00,000 5,00,000
|
||
|
Bank A/c (10,00,000 – 3,000 – 2,000) Dr. Calls – in – Advances A/c Dr. To Equity Share Allotment A/c (Being amount received on share allotment) |
9,95,000 3,000
|
9,98,000
|
||
|
Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Equity Share Forfeiture A/c To Equity Share Allotment A/c (Being 200 shares forfeited) |
2,000 1,000
|
1,000 2,000
|
||
|
Bank A/c Dr. To Equity Share Capital A/c] To Securities Premium A/c (Being forfeited shares were reissued for Rs.4,000) |
4,000
|
2,000 2,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital reserve) |
1,000
|
1,000
|
||
Working Notes:
WN1: Calculation of Amount received on Application
Application amount received on 1,00,000 share = 1000000
Shareholders of 300 shares paid in advance (300 x 10) = 3000
Total amount = 10,03,000
