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Himalaya Company Limited Issued for Public Subscription 1,20,000 Equity Shares of ₹ 10 Each at a Premium for ₹ 2 per Share Payable as Under: - Accountancy

Journal Entry

Himalaya Company Limited issued for public subscription  1,20,000 equity shares of ₹  10 each at a premium for ₹  2 per share payable as under:

 With Application       ---  ₹ 3 per share,
 On allotment (including premium)       -- ₹  5 per share,
 On First call       -- ₹  2 per share 
 On Second and Final call       -- ₹  2 per share.

Applications were received for 1,60,000 shares . Allotment was made on pro rata basis . Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited  after the second call was made . All the shares forfeited were reissued to Teena as fully paid at ₹  7 per share.
Record journal entries and show the transactions relating to share capital in the company's Balance Sheet.  

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Solution

Books of Himalaya Company Ltd.
Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

  Bank A/c

Dr.

 

4,80,000

 
  To Share Application A/c    

4,80,000

  (Share Application money received for 1,60,000 shares @ Rs 3 per share)      
         
  Share Application A/c

Dr.

 

4,80,000

 
  To Equity Share Capital A/c    

3,60,000

  To Share Allotment A/c    

1,20,000

  (Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)      
         
  Share Allotment A/c

Dr.

 

6,00,000

 
  To Equity Share Capital A/c    

3,60,000

  To Securities Premium    

2,40,000

  (Share Allotment due on 1,20,000 shares @ Rs 5 per share including Rs 2 Securities Premium)      
         
  Bank A/c

Dr.

 

4,80,000

 
  To Share Allotment A/c    

4,80,000

  (Share allotment for 1,20,000 shares @ Rs 5 per share received)      
         
  Share First Call A/c

Dr.

 

2,40,000

 
  To Equity Share Capital A/c    

2,40,000

  (Share First Call due on 1,20,000 shares @ Rs 2 per share)      
         
  Bank A/c

Dr.

 

2,30,400

 
  To Share First Call A/c    

2,30,400

  (Share First Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)      
         
  Share Final Call A/c

Dr.

 

2,40,000

 
  To Equity Share Capital A/c    

2,40,000

  (Share Final call due on 1,20,000 shares @ Rs 2 per share)      
         
  Bank A/c

Dr.

 

2,30,400

 
  To Share Final Call A/c    

2,30,400

  (Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)      
         
  Equity Share Capital A/c (4,800×10)

Dr.

 

48,000

 
  To  Share First Call A/c (4,800×2)      

9,600

  To  Share Final Call A/c (4,800×2)      

9,600

  To  Share Forfeiture A/c (4,800×6)      

28,800

  (4,800 shares forfeited for the non–payment of First Call and Final Call)      
           
  Bank A/c

Dr.

 

33,600

 
  Share Forfeiture A/c

Dr.

 

14,400

 
  To  Equity Share Capital      

48,000

  (4,800 shares reissued @ Rs 7 per share, fully paid–up)      
           
  Share Forfeiture A/c

Dr.

 

14,400

 
  To Capital Reserve A/c      

14,400

  (Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)        

Himalaya Company Limited
Balance Sheet

Particulars

Note No.

Amount 

(₹)

I. Equity and Liabilities    

1. Shareholders’ Funds

   

a. Share Capital

1

12,00,000

b. Reserves and Surplus

2

2,54,400

2. Non-Current Liabilities

   

3. Current Liabilities

   

Total

 

14,54,400

II. Assets    

1. Non-Current Assets

   

2. Current Assets

   

a. Cash and Cash Equivalents

3

14,54,400

Total

 

14,54,400

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(₹)

1

Share Capital  
  Authorised Share Capital  
  …….. shares of Rs 10 each

  Issued Share Capital  
  1,20,000 shares of Rs 10 each

12,00,000

  Subscribed, Called-up and Paid-up Share Capital  
  1,20,000 shares of Rs 10 each

12,00,000

2

Reserves and Surplus  
  Securities Premium

2,40,000

2,54,400

  Capital Reserve

14,400

3

Cash and Cash Equivalents  
  Cash at Bank

14,54,400

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

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 1 Accounting for Share Capital
Exercise | Q 77 | Page 125
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