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Kamal Ltd. Was Formed on 1st April, 2010 with an Authorised Capital of ₹ 2,00,000 , Divided into 2,000 Equity Shares of ₹ 100 Each. - Accountancy

Journal Entry

Kamal Ltd. was formed on 1st April, 2010 with an authorised capital of ₹ 2,00,000 , divided into 2,000 Equity Shares of ₹ 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of ₹ 5 per share payable as:

On application  ₹ 10 per share,
 On allotment  ₹ 25 per share(including premium),
 On first call ₹ 40 per share,
 On final call  ₹ 30 per share.

Applications were received for 900 shares which were duly allotted and the allotment money was received in full . At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ ₹ 60 per share , ₹ 70 per share paid-up.
Final call has not been made.
You are required to
(i) give necessary journal entries to record the above transactions and
(ii) show how  share capital would appear in the Balance Sheet of the company.

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Solution

Authorised Capital: 2,000 equity shares at Rs 100 each

Issued Capital:

1,000 equity shares at Rs 100 each to the vendor of the building

1,000 equity shares at Rs 100 each with a premium Rs 5 to the public

Applied by public: 900 equity shares

Payable by public as:

Application

Rs

10

 

Allotment

Rs

25

(20+5)

First Call

Rs

40

 

Called-up

 

75

(70+5)

Final Call

Rs

30

 

 

Rs

105

(100+5)

Books of Kamal Limited
Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Building A/c

Dr.

 

1,00,000

 

 

To Vendor A/c

 

 

1,00,000

 

(Building purchased from the vendor)

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c

 

 

1,00,000

 

(1,000 equity shares of Rs 100 each issued to the vendor of building)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,000

 

 

To Equity Share Application A/c

 

 

9,000

 

(Share application money received for 900 shares at Rs 10 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

9,000

 

 

To Equity Share Capital

 

 

9,000

 

(Share application money of 900 shares at Rs 10 each transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

22,500

 

 

To Securities Premium

 

 

4,500

 

To Equity Share Capital A/c

 

 

18,000

 

(Share allotment due on 900 shares at Rs 25 each including Rs 5 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

22,500

 

 

To Equity Share Allotment A/c

 

 

22,500

 

(Share allotment money received on 900 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

36,000

 

 

To Equity Share Capital A/c

 

 

36,000

 

(First call due on 900 shares at Rs 40 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

32,000

 

 

Calls-in-Arrears A/c

 

4,000

 

 

To Equity Share First-call A/c

 

 

36,000

 

(First call received on 800 shares and a holder of 100 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

7,000

 

 

To Share Forfeiture A/c

 

 

3,000

 

To Calls-in-Arrears A/c

 

 

4,000

 

(100 shares of Rs 100 each, Rs 70 called-up forfeited for the non-payment of Rs 40)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,000

 

 

Share Forfeiture A/c

Dr.

 

1,000

 

 

To Equity Share Capital A/c

 

 

7,000

 

(100 shares of Rs 100 each, re-issued at Rs 60 per share as Rs 70 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,000

 

 

To Capital Reserve A/c

 

 

2,000

 

(Balance in Share Forfeiture the Account after re-issue transferred to Capital Reserve)

 

 

 

As per the Schedule III of Companies Act 2013, the Company's Balance Sheet is presented as follows.

Kamal Ltd.
Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,63,000

b. Reserves and Surplus

2

6,500

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

1,69,500

II. Assets

 

 

1. Non-Current Assets

 

 

a. Fixed Assets

 

 

i. Tangible Assets

3

1,00,000

2. Current Assets

 

 

a. Cash and Cash Equivalents

4

69,500

Total

 

1,69,500

NOTES TO ACCOUNTS 

Note No.

Particulars

Amount 

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

2,000 Equity Shares of Rs 100 each

2,00,000

 

Issued Share Capital

 

 

2,000 Equity Shares of Rs 100 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,000 Equity Shares of Rs 100 each(for consideration other than cash)

1,00,000

 

1,63,000

 

 900 Equity Shares of Rs 100 each, Rs 70 Called-up

63,000

2

Reserves and Surplus

 

 

Securities Premium

4,500

 

6,500

 

Capital Reserve

2,000

3

Tangible Assets

 

 

Building

1,00,000

4

Cash and Cash Equivalents

 

 

Cash at Bank

69,500

Working Notes:

Share Forfeiture (at the time of forfeiture)

3,000

Credit

Less: Share Forfeiture (at the time of re-issue)

1,000

Debit

Balance in Share Forfeiture (after re-issue)

2,000

Credit

Capital Reserve = Balance in Share Forfeiture (after re-issue) = Rs 2,000 

  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 71 | Page 123
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