Luxury Cars Ltd.' invited applications for issuing 10,000 equity shares of Rs 50 each at a premium of Rs 100 per share. The amount was payable as follows :
On application - Rs 75 per share (including Rs 50 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares were forfeited. The forfeited shares were later on re-issued for Rs 90 per share as fully paid up.
Pass necessary journal entries for the above transaction in the books of the company.
Solution
| In the books of Luxury Cars Ltd Journal Entry |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
Bank A/c Dr. To Equity Share Application A/c (Being amount received on an application for 10,000 shares |
7,80,000
|
7,80,000
|
||
|
Equity Share Application A/c Dr. To Equity Share Capital A/c To Securities Premium A/c To Calls-in-Advance A/c (Being amount of application transferred to Share Capital and securities premium) |
7,80,000
|
2,50,00 5,00,000 30,000
|
||
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being amount due on Allotment) |
7,50,000
|
2,50,000 5,00,000
|
||
|
Bank A/c (7,50,000 – 30,000 – 22,500) Dr. Calls – in – Advances A/c Dr. To Equity Share Allotment A/c (Being amount received on share Allotment) |
6,97,500 30,000
|
7,27,500
|
||
|
Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Equity Share Forfeiture A/c To Equity Share Allotment A/c (Being 300 shares forfeited) |
15,000 15,000
|
7,500 22,500
|
||
|
Bank A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being forfeited shares were reissued for 90 as fully paid up) |
27,000
|
15,000 12,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital |
7,500
|
7,500
|
||
Working Notes:
WN1: Calculation of Amount received on Application
Application amount received on 10,000 shares = 7,50,000
Shareholders of 400 shares paid in advance (400 x 75) = 30,000
Total amount = 7,80,000
