Question

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.

Answer 1

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