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Question
KY Ltd. invited applications for issuing 60,000 equity shares of Rs 10 each at a premium of `4 per share. The amount was payable as follows:
On applications and allotment - Rs 8 per share (including premium)
On first and final call - the balance amount
Applications for 2,00,000 shares were received. Applications for 80,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 600 shares applied by Ravi. His shares were forfeited. The forfeited shares were re-issued at a discount of Rs 8 per share.
Pass necessary journal entries for the above transactions in the books of KY Ltd
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Solution
| Journal Entries In the books of KY Ltd. |
||||
| 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 8 each including the discount of Rs 4 each ) |
16,00,000
|
16,00,000
|
||
|
Share application and allotment A/c Dr. To Share capital A/c To Securities Premium A/c To Bank A/c To Share First and Final Call A/c (Being share application of 60,000 shares transferred to share capital, share application and allotment on 80,000 shares refunded and rest is adjusted on share first and final call) |
16,00,000
|
2,40,000 2,40,000 6,40,000 4,80,000
|
||
|
Share First and Final Call A/c Dr. To Share capital A/c (Being share first and final call due on 60,000 shares of Rs 6 each) |
3,60,000
|
3,60,000
|
||
| Computation Table | ||||||||
| Category | Share Applied |
Share Allotted |
Money received on Application and Allotment @ Rs 8 each including discount of Rs 4 each |
Money transfers to share capital @ Rs 4 each |
Money transfer to securities premium@ Rs 4 each |
Excess Application and Allotment money |
Share first and final call due @ Rs 6 each |
Money Refunded |
| I | 80,000 | Nil | 6,40,000 | 6,40,000 | ||||
| II | 1,20,000 | 60,000 | 9,60,000 | 2,40,000 | 2,40,000 | 4,80,000 | 3,60,000 | |
| 2,00,000 | 60,000 | 16,00,000 | 2,40,000 | 2,40,000 | 4,80,000 | 3,60,000 | 6,40,000 | |
Working Note:
Those who applied for 1,20,000 shares, allotted = 60,000 Shares
Those who applied for 600 shares, allotted = `60000 xx 600/120000` = 300 share
Share Application and Allotment received on 600 shares of Rs 8 each (including the discount of Rs 4 each) = Rs 4,800
Shares Allotted (300 ×8) = Rs 2,400
Excess Application and Allotment money received = Rs 2400
Share First and Final Call due on 300 shares of its Rs 6 each = Rs 1,800
Excess Application and Allotment money received = Rs 2,400
Now, he has already paid an amount of Its 2,400 in excess at the time of application and allotment which is more than the amount due from him at the time of share final call. Thus, forfeiture is not possible in this case. Thus, this question has incomplete or wrong information, hence, cannot be solved fully.
