Question

Fast Food Ltd. issued a prospectus offering 10,000 equity shares of ₹50 each at par payable as follows:

	₹
On Application	15
On Allotment	10
On First Call	15
On Final Call	10

Ram, the holder of 500 equity shares did not pay the amount due on both the calls. These 500 shares were forfeited by the Board of Directors and 300 of these shares were subsequently re-issued at ₹55 per share.
Show the entries in the Cash Book and Journal of the Company. Also prepare the Opening Balance Sheet.

Answer 1

Journal entries In the books of Fast Food Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		1,50,000
	To Share Application A/c			1,50,000
	(Application money received on 10,000 shares @ ₹15)
2.	Share Application A/c     ...Dr.		1,50,000
	To Share Capital A/c			1,50,000
	(Application money transferred to Share Capital)
3.	Share Allotment A/c     ...Dr.		1,00,000
	To Share Capital A/c			1,00,000
	(Allotment due @ ₹10 per share)
4.	Bank A/c     ...Dr.		1,00,000
	To Share Allotment A/c			1,00,000
	(Allotment money received in full)
5.	Share First Call A/c     ...Dr.		1,50,000
	To Share Capital A/c			1,50,000
	(First call due @ ₹15 per share)
6.	Bank A/c     ...Dr.		1,42,500
	Calls in Arrears A/c     ...Dr.		7,500
	To Share First Call A/c			1,50,000
	(First call received except from Ram - 500 shares)
7.	Share Final Call A/c     ...Dr.		1,00,000
	To Share Capital A/c			1,00,000
	(Final call due @ ₹10 per share)
8.	Bank A/c     ...Dr.		95,000
	Calls in Arrears A/c     ...Dr.		5,000
	To Share Final Call A/c			1,00,000
	(Final call received except from Ram - 500 shares)
9.	Share Capital A/c     ...Dr.		25,000
	To Calls in Arrears A/c			12,500
	To Share Forfeiture A/c			12,500
	(500 shares forfeited: ₹25 unpaid; ₹25 paid)
10.	Bank A/c     ...Dr.		16,500
	Share Forfeiture A/c     ...Dr.		8,500
	To Share Capital A/c			15,000
	To Securities Premium A/c			1,500
	(300 shares reissued at ₹55: ₹50 face value + ₹5 premium)
11.	Share Forfeiture A/c     ...Dr.		7,500
	To Capital Reserve A/c			7,500
	(Profit on reissue of 300 forfeited shares transferred)

Cash Book (Bank Column Only)

Date	Particulars	Amount (₹)
1.	To Application	1,50,000
2.	To Allotment	1,00,000
3.	To First Call	1,42,500
4.	To Final Call	95,000
5.	To Reissue of 300 shares	16,500
	Total	₹5,04,000

 

Balance Sheet of Fast Food Ltd.
Liabilities	Amount (₹)	Assets	Amount (₹)
Share Capital
10,000 Equity Shares of ₹50 each	5,00,000	Bank Balance (Cash Book Total)	5,04,000
Less: 500 shares forfeited (not yet reissued)	(10,000)	Less: Calls in Arrears (200 shares unpaid)	(5,000)
Add: 300 reissued shares	15,000
Total Share Capital	4,90,000
Securities Premium A/c	1,500
Capital Reserve A/c	7,500
Total	₹4,99,000	Net Bank	₹4,99,000