JY Ltd. invited applications for issuing 70,000 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 were received. Applications for 60,000 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 1,400 shares applied by Naresh. 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 JY Ltd.
Solution
| 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 premium of Rs 1 each) |
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 of 70,000 shares transferred to share capital, share application and allotment on 60,000 shares refunded and rest is adjusted on share first and final call) |
8,00,000 70,000
|
3,50,000 2,40,00 2,80,000
|
||
|
Share First and Final Call A/c Dr. To share capital A/c (Being share first and final Call due on 70,000 shares of Rs 5 each) |
3,50,000
|
3,50,000
|
||
|
Bank A/c Dr. To Share First and Final Call A/c (Being share first and final call received) |
69,300
|
69,300
|
||
|
Share Capital A/c Dr. To Share Forfeiture A/c To Discount on issue A/c To Share First and Final Call A/c (Being 700 share were forfeited for non-payment of share first and final of Rs 5 each) |
7,000
|
5,600 700 700
|
||
|
Bank A/c Dr. Discount on issue A/c Dr. Share forfeited A/c Dr. To share capital A/c (Being 700 forfeited share were re-issued at a discount of Rs 8 per Share) |
700 700 5,600
|
7,000
|
||
|
Share Forfeiture A/c Dr. To capital Reserve A/c (Being share forfeiture transferred to capital reserve) |
Nil
|
Nil
|
||
| Category | Share Applied |
Share Allotted |
Money received on Application and Allotment @ Rs 4 each including premium of Rs 1 each |
Money transfers to share capital@ Rs 5 each |
Money transfer to securities premium @ Rs 1 each |
Excess Application on and Allotment money |
Share first and final call due @Rs 5 each |
Amount receivable on share first and final call after adjustment |
Money Refunded |
| I | 60,000 | Nil | 2,40,000 | 2,40,000 | |||||
| II | 1,40,000 | 70,000 | 5,60,000 | 3,50,000 | 70,000 | 2,80,000 | 3,50,000 | 69,300 | |
| 2,00,000 | 70,000 | 8,00,000 | 3,50,000 | 70,000 | 2,80,000 | 3,50,000 | 69,300 | 2,40,000 | |
Working Note:
Those who applied for 1,40,000 shares, allotted = 70,000 Shares
Those who applied for 1,400 shares, allotted = `70000xx 1400/140000` = 700 share
Share Application and Allotment received on 1,400 glares of Rs 4 each = Rs 5,600
Shares Allotted (700 × 4) =Rs 2,800
Excess Application and Allotment money received = Rs 2,800
Share First and Final Call due on 700 shares of Rs 5 each = Rs 3,500
Excess Application and Allotment money received = Rs 2,800
Share First and Final Call not received = Rs 700 (3,500-2,800)
Therefore, Share First and final Call received = Rs 69,300 (70,000 - 700)
