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A Ltd. Invited Applications for Issuing 1,00,000 Shares of Rs 10 Each at a Premium of Rs 1 per Share. the Amount Was Payable as Follows: All the Shares of Rishabh and Sudha Were Forfeited and Were Subsequently Re-issued at Rs 7 per Share Fully Paid. Pass the Necessary Journal Entries in the Books of a Ltd. Open Calls-in-arrears Account and Calls-in-advance Account Wherever Required - CBSE (Arts) Class 12 - Accountancy

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Question

A Ltd. invited applications for issuing 1,00,000 shares of Rs 10 each at a premium of Rs 1 per share. The amount was payable as follows:

On Application: Rs 3 per share

On Allotment: Rs 3 per share (including premium)

On First Call: Rs 3 per share

On Second and Final Call: Balance amount

Applications for 1,60,000 shares were received. The allotment was made on the following basis:
(i) To applicants for 90,000 shares: 40,000 shares

(ii) To applicants for 50,000 shares: 40,000 shares

(iii) To applicants for 20,000 shares: full shares

Excess money paid on the application is to be adjusted against the amount due on allotment and calls. Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money.

Another shareholder, Sudha, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money.

All the shares of Rishabh and Sudha were forfeited and were subsequently re-issued at Rs 7 per share fully paid. Pass the necessary journal entries in the books of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required

Solution

In the books of A Ltd.
Journal
Date Particulars L.F

Dr.

Rs

Cr.

Rs

1

Bank A/c    Dr

   To Equity Share Application A/c

(Being application money received on 1,60,000 shares)

 

4,80,000

 

 

4,80,000

2

Equity Share Application A/c   Dr.

  To Equity Share Capital A/c

  To Equity Share Allotment A/c

  To Calls in Advance A/c

(Being application money received transferred to Share Capital, to be adjusted on allotment and calls)

 

4,80,000

 

 

 

 

 

 

3,00,000

1,50,000

30,000

 

 

3

Equity Share Allotment A/c (3x1,00,000)   Dr

  To Equity Share Capital A/c (2x1,00,000)

  To Securities Premium Reserve A/c (1x1,00,000)

(Being allotment made due on 1,00,000 shares)

 

3,00,000

 

 

 

 

2,00,000

1,00,000

 

4

Bank A/c      Dr.

Calls in Arrears A/c (WN1)     Dr.

   To Equity Share Allotment A/c (3x50,000)

(Being allotment money received except 1,200 shares of Rishabh)

 

1,47,300

2,700

 

 

1,50,000
5

Equity Share First Call A/c (3x1,00,000)     Dr

   To Equity Share Capital A/c (3x1,00,000)

(Being share first call money due on 1,00,000 shares)

 

3,00,000

 

 

3,00,000
6

Bank A/c           Dr

Calls in Advance A/c      Dr.

Calls in Arrears A/c (WN)    Dr.

    To Equity Share First Call A/c

(Being first call money received)

 

2,64,600

30,000

5,400

 

 

 

 

 

3,00,000

 

7

Equity Share Second and Final Call A/c (2x1,00,000)   Dr

  To Equity Share Capital A/c

(Being share second and final call money due on 1,00,000 shares)

 

2,00,000

 

 

2,00,000

 

8

Bank A/c              Dr

Calls in Arrears A/c(2x2,000)   Dr

    To Equity Share Second and Final Call A/c

(Being share second and final Call money received)

 

1,96,000

4,000

 

 

 

 

2,00,000

 

9

Share Capital A/c (2,000x10)       Dr

Securities Premium Reserve A/c (1x1,200)   Dr

    To Calls in Arrears A/c (2,700 + 5,400 + 4,000)

    To Share Forfeiture A/c

(Being 2000 shares of Rishabh and Sudha forfeited due to non-payment of allotment and call money)

 

20,000

1,200

 

 

 

 

 

 

12,100

9,100

 

 

10

Bank A/c (7x2,000)     Dr

Share Forfeiture A/c    Dr

   To Share Capital A/c (10x2000)

(Being 2000 forfeited shares of Rishabh and Sudha reissued as fully paid-up)

 

14,000

6,000

 

 

 

 

12,000

 

11

Share Forfeiture A/c (9,100 – 6,000)    Dr.

   To Capital Reserve A/c

(Being amount forfeited transferred to Capital Reserve)

 

3,100

 

 

 

3,100

 

 

Working Note:

Note No Particulars Amount (Rs)
1

Amount not paid by Rishabh (Calls in Arrears)

Allotment Due on Rishabh's Shares (3x1,200)

Less: Excess on Application 3x(1500-1200)

 

#No. of Shares allotted to Rishabh = 1,50040,000/50,000 =1,200

3,600

900

2,700

2

Amount not paid in respect of First Call (Calls in Arrears)

First call Due (32000)-i.e. on 800 and 1,200 shares

Less: Excess on Application on Sudha's Shares 3x(1800- 800)-2,400 i.e. adjusted on the allotment

 

 

6,000

600

5,400

 

Pro Rata Table

Shares Applied for

Rs 3

Shares Allotted

Rs 3

Allotment

Rs 3

First Call

Rs 3

Second &
Final Call

Rs 3

Refund
Units Rs Units Rs Rs Rs Rs Rs

90,000

50,000

20,000

2,70,000

1,50,000

60,000

40,000

40,000

20,000

1,20,000

1,20,000

60,000

1,20,000

30,000

-

30,000

-

-

-

-

-

Nil

Nil

Nil

1,60,000 4,80,000 1,00,000 3,00,000 1,50,000 30,000    

 

  Is there an error in this question or solution?
Solution A Ltd. Invited Applications for Issuing 1,00,000 Shares of Rs 10 Each at a Premium of Rs 1 per Share. the Amount Was Payable as Follows: All the Shares of Rishabh and Sudha Were Forfeited and Were Subsequently Re-issued at Rs 7 per Share Fully Paid. Pass the Necessary Journal Entries in the Books of a Ltd. Open Calls-in-arrears Account and Calls-in-advance Account Wherever Required Concept: Calls in Advance and Arrears.
S
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