Question

Meera Ltd. invited applications for 50,000 equity shares of ₹10 each at a premium of ₹2 per share, payable as follows:

On Application on 1st May, 2017	₹2
On Allotment on 1st July, 2017	₹5
On 1st and Final Call on 1st October, 2017	₹5

The Company received applications for 62,500 shares.
It was decided to:

1. Refuse allotment to the applicants of 2,500 shares.
2. Allot in full to applicants of 10,000 shares.
3. Allot the balance of the shares applied on a pro-rata basis among the other applicants.
4. Utilize the excess application money in part payment of allotment money.
5. Charge interest on calls-in-arrears, if any, @ 10% per annum.

All the money due was received except from one shareholder to whom 200 shares had been allotted in full. The amount was due by him to the company even till the date of the Balance Sheet, which was 31st March, 2018.
The company charged interest on calls-in-arrears from the shareholder from the date on which it was due till the Balance Sheet date.
You are required to, for the year 2017-18:

1. Prepare the Cash Book to record the above issue of shares.
2. Pass journal entries in the Journal Proper (including entries for interest on calls-in-arrears).

Answer 1

Dr.	Cash Book (Bank Column)		Cr.
Receipts	Amount (₹)	Payments	Amount (₹)
To Equity Share Application A/c	1,25,000	By Equity Share Application A/c	5,000
To Equity Share Allotment A/c	2,29,000	By Balance c/d	5,98,000
To Equity Share 1st & Final Call A/c	2,49,000
	6,03,000		6,03,000

 

Journal entries In the books of Meera Ltd.
Date	particulars	L.F.	Debit (₹)	Credit (₹)
1.	Equity Share Application A/c     ...Dr.		1,20,000
	To Equity Share Capital A/c			1,00,000
	To Equity Share Allotment A/c			20,000
	(Share Application transferred to share capital)
2.	Equity Share Allotment A/c     ...Dr.		2,50,000
	To Equity Share Capital A/c			1,50,000
	To Securities Premium Reserve A/c			1,00,000
	(Share allotment due)
3.	Calls-in-arrears A/c     ...Dr.		1,000
	To Equity Share Allotment A/c			1,000
	(Amount not received on allotment)
4.	Equity Share 1st & Final Call A/c     ...Dr.		2,50,000
	To Equity Share Capital A/c			2,50,000
	(Ist & Final call due)
5.	Calls-in-arrears A/c     ...Dr.		1,000
	To Equity Share Ist & Final Call A/c			1,000
	(Amount not received on Ist & final call)
6.	Shareholders/Sundry Members A/c     ...Dr.		125
	To Interest on calls-in-arrears A/c			125
	(Interest on calls in arrears due from shareholder)
7.	Interest on calls-in-arrears A/c     ...Dr.		125
	To Statement of Profit & Loss			125
	(Interest on calls in arrears account closed)

Working Note:

	₹
Interest on ₹1,000 @ 10% p.a. from 1st July 2017 to 31st March, 2018	75
Interest on ₹1,000 @ 10% p.a. from 1st Oct. 2017 to 31st March, 2018	50
	125