Question

GY Ltd. invited applications for issuing 85,000 equity shares of Rs 10 each at a discount of 10%. The amount was payable as follows:
On applications and allotment - Rs 4 per share
On first and final call - the balance amount
Application for 2,00,000 shares was received. Applications for 30,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. All money was received except on 1,700 shares applied by Hari. His shares were forfeited. The forfeited shares were re-issued at the maximum discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of the company.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit Rs	Credit Rs
	Bank A/c           Dr.         To share application and allotment A/c (Being share application and allotment received on 2,00,000 of  Rs 4 each including the discount of 10% )		8,00,000	8,00,000
	Share application and allotment A/c         Dr. Discount on issue A/c            Dr.      To share capital A/c      To Bank A/c      To share First and Final Call A/c (Being share application and allotment on 30,000 shares refunded and excess application money adjusted on share first and final call)		8,00,000 85,000	4,25,000 1,20,000 3,40,000
	Share First and Final Call A/c          Dr.     To share capital A/c (Being share first and final Call due on 85,000 shares of Rs 5 each)		4,25,000	4,25,000
	Bank A/c                         Dr.       To Share First and Final Call A/c (Being share first and final call received)		84,150	84,150
	Share Capital A/c                Dr.       To Share Forfeiture A/c       To Share Forfeiture A/c       To Discount issue of Share A/c (Being 850 share were forfeited for non-payment of share first and final of Rs 5 each)		8,500	6,800 850 850
	Bank A/c               Dr. Discount on issue A/c               Dr. Share forfeited A/c                   Dr.      To share capital A/c (Being 850 forfeited share were re-issued as the maximum permissible amount of discount by law)		850 850 6,800	8,500

 

Computation Table
Category	Share Applied	Share Allotted	Money received on Applications and Allotment @ Rs 4 each	Money transfers to share capital@ Rs 5 each including Discount of 10%	Money transfer to securities Discount @ Rs 1 each	Excess Application on and Allotment money	Share first and final call due @Rs 45 each	Amount receivable on share first and final call after adjustment	Money Refunded
I	30,000	Nil	1,20,000						1,20,000
II	1,70,000	85,000	6,80,000	4,25,000	85,000	3,40,000	4,25,000	85,000
	2,00,000	85,000	8,00,000	4,25,000	85,000	3,40,000	4,25,000	85,000	1,20,000

Working Note:

Those who applied for 1,70,000 shares, allotted = 85,000 Shares

Those who applied for 1,700 shares, allotted  = `85000xx 17500/170000` = 850 shares

Share Application and Allotment received on 1,700 glares of Rs 4 each = Rs 6,800

Shares Allotted (850 × 4) = Rs ,400

Excess Application and Allotment money received = Rs 3,400
Share First and Final Call due on 850 shares of Rs 5 each = Rs 4,250
Excess Application and Allotment money received = Rs 3,400
Share First and Final Call not received = Rs 850 (4,250- 3,400)
Therefore, Share First and final Call received = Rs  84,150 (85,000 - 850)