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Jjk Ltd. Invited Applications for Issuing 50,000 Equity Shares of ₹ 10 Each at Par. the Amount Was Payable as Follows: - Accountancy

Journal Entry

JJK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows:

       On Application   ---  ₹ 2 per share,
       On Allotment   ---  ₹ 4 per share; and
       On First and Final call   ---  
Balance Amount.
 

The issue was oversubscribed three times. Applications for 30%  shares were rejected and money refunded .Allotment was made to the remaining applicants as follows:

       Category  No . of Shares Applied  No. of Shares Allotted
       I     80,000    40,000
      II     25,000
  10,000
 

 Excess money  paid by the applicants who were allotted shares was adjusted towards sums due on allotment .
Deepak, a shareholder belonging  to Category I , who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment . Afterwards, first and final call was made and was duly received . The forfeited shares of Deepak and Raju were reissued at ₹11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of company. 

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

  Bank A/c (1,50,000 × 2)

Dr.

 

3,00,000

 

    To Share Application A/c

 

 

 

3,00,000

  (Application money received on 1,50,000 shares)

 

 

 

 

   

 

 

 

 

  Share Application A/c

Dr.

 

3,00,000

 

    To Share Capital A/c

 

 

 

1,00,000

     To Share Allotment A/c

 

 

 

1,10,000

     To Bank A/c

 

   

90,000

  (Application money transferred to Share Capital)

 

 

 

 

    

 

 

 

 

  Share Allotment A/c (50,000 × 4)

 

 

2,00,000

 

    To Share Capital A/c

 

 

 

2,00,000

  (Allotment money due on 50,000 shares)

 

 

 

 

   

 

 

 

 

  Bank A/c

Dr.

 

88,900

 

    To Share Allotment A/c (WN2)

 

 

 

88,900

  (Allotment money received)

 

 

 

 

   

 

 

 

 

  Share Capital A/c (600 × 6)

Dr.

 

3,600

 
     To Share Allotment A/c (1,000 + 100)

 

   

1,100

     To Share Forfeiture A/c (2,000 + 500)

 

   

2,500

  (600 shares forfeited for non–payment of allotment money)

 

     
           
  Share First and Final Call A/c

Dr.

 

1,97,600

 
     To Share Capital A/c

 

   

1,97,600

  (Call money due on 49,400 shares)

 

     
   

 

 

 

 

  Bank A/c

Dr.

 

1,97,600

 

    To Share First and Final Call A/c

 

 

 

1,97,600

  (Call money received)

 

 

 

 

   

 

 

 

 

  Bank A/c (600 × 11)

Dr.

 

6,600

 

  To Share Capital A/c

 

 

 

6,000

    To Security Premium Reserve A/c

 

 

 

600

  (600 shares re–issued at Rs 11 per share)

 

 

 

 

   

 

 

 

 

  Share Forfeiture A/c

Dr.

 

2,500

 

    To Capital Reserve A/c

 

 

 

2,500

  (Profit on re–issue transferred to Capital Reserve)

 

 

 

 

Working Notes:

WN1: Computation Table

Categories

Shares Applied

 

Shares Allotted

 

Money received on Application 

@ Rs 2 each 

Money transferred to Share Capital

@ Rs 2 each

Excess Application Money

Amount adjusted on Allotment 

 

Money refunded

I

80,000

40,000

1,60,000

80,000

80,000

80,000

II

25,000

10,000

50,000

20,000

30,000

30,000

III

45,000

90,000

90,000

 

1,50,000

50,000

3,00,000

1,00,000

1,10,000

1,10,000

90,000


WN 2:
Calculation of Amount Received on Allotment

Amount Due on Allotment

2,00,000

  Less: Excess Received

1,10,000

Balance to be Received

90,000

  Less: Amount not paid by Deepak

(1,000)

  Less: Amount not paid by Raju

(100)

Amount received on Allotment

88,900


WN 3: Calculation of Shares Applied/Allotted  

Shares Alloted to Deepak = `40000/80000 xx 1000 = 500`

Shares Applied by Raju = `25000 / 10000 xx 100 = 250`

Amount not paid by Deepak on Allotment

Amount received on Application

2,000

  Less: Transferred to Share Capital

(1,000)

Excess received on Application

1,000

Amount due on allotment

2,000

  Less: Excess adjustment

(1,000)

Amount unpaid by Deepak 

1,000

Amount not paid by Raju on Allotment

Amount received on Application

500

  Less:  Transferred to Share Capital

(200)

Excess received on Application

300

Amount due on allotment

400

  Less: Excess adjustment

(300)

Amount unpaid by Raju 

100

  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 81 | Page 126
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