Question

Jain Ltd. Invited applications for issuing 35,000 Equity Shares of Rs 10 each at a discount o

10%. The amount was payable as follows:

On Application Rs 5 per share.

On Allotment Rs 3 per share

On First and Final Call − Balance

Applications for 50,000 shares were received. Applications for 8,000 shares were rejected and the application money of these applicants was refunded. Shares were allotted on pro-rata basis to the remaining applicants and the excess money received with applications from these applicants was adjusted towards sums due on allotment. Jeevan who had applied for 600 shares failed to pay allotment and first and final call money. Naveen the holder of 400 shares failed to pay first and final call money. Shares of Jeevan and Naveen were forfeited. Of the forfeited 800 shares were re-issued at Rs 15 per share fully paid up. The re-issued shares included all the shares of Naveen.

Pass necessary Journal Entries for the above transactions in the books of Jain Ltd.

Answer 1

Books of Jain Ltd.
Journal
S. No.	Particulars		L. F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		2,50,000
	To Share Application A/c				2,50,000
	(Application money received on 50,000 Shares at Rs 5 per share)
	Share Application A/c	Dr.		2,50,000
	To Share Capital A/c				1,75,000
	To Share Allotment A/c				35,000
	To Bank A/c				40,000
	(Share application money on 35,000 shares transferred to Share Capital , 8,000 shares refunded and the balance adjusted towards share allotment)
	Share Allotment A/c	Dr.		1,05,000
	Discount on Share A/c	Dr.		35,000
	To Share Capital A/c				1,40,000
	(Allotment money due on 35,000 at Rs 3 at a discount of  Re. 1)
	Bank A/c	Dr.		69,000
	To Share Allotment A/c				69,000
	(Allotment money received i.e. 1,05,000 – 35,000 – 1000)
	Share First and Final Call A/c	Dr.		35,000
	To Share Capital A/c				35,000
	(Amount due on Share First and Final Call)
	Bank A/c	Dr.		34,100
	To Share First and Final Call A/c				34,100
	(Call money received i.e. 35,000 – 900)
	Share Capital A/c (900 × 10)			9,000
	To Discount on Shares A/c (1000 × 1)				900
	To Share Forfeiture A/c				6,200
	To Share Allotment A/c				1,000
	To Share First and Final Call A/c				900
	(Forfeiture of 900 shares for non-payment of allotment and call money)
	Bank A/c	Dr.		12,000
	To Share Capital A/c				8,000
	To Securities Premium  A/c (800 × 5)				4,000
	(800 forfeited shares reissued at Rs 15 per share)
	Share Forfeiture A/c	Dr.		5,600
	To Capital Reserve A/c				5,600
	(Profit on reissue transferred to Capital Reserve)