Question

Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of ₹10 each at a premium of ₹3 per share. The amount was payable as follows:

On application	₹6 per share (including premium ₹1)
On allotment	₹3 per share (including premium ₹1)
the balance	on first and final call

Applications for 1,80,000  shares were received. Applications for 10,000  shares were rejected and pro rata allotment was made to the remaining applicants. Over payment received on application was adjusted towards sums due on allotment. All calls were made and were duly received except allotment and final call from Aditya who was  allotted 3,200 shares. His shares were forfeited. Half of the forfeited shares were reissued for ₹43,000 as fully paid-up.
Pass necessary journal entries for the above transactions in the books of Nitro Paints Ltd.

Answer 1

Journal entries Nitro Paints Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		10,80,000
	To Share Application A/c			10,80,000
	(Being application money received for 1,80,000 shares @ ₹6 each)
2.	Share Application A/c     ...Dr.		10,80,000
	To Share Capital A/c (1,60,000 × ₹5)			8,00,000
	To Securities Premium Reserve A/c (1,60,000 × ₹1)			1,60,000
	To Share Allotment A/c			1,20,000
	To Bank A/c			60,000
	(Being application money adjusted and excess refunded)
3.	Share Allotment A/c     ...Dr.		4,80,000
	To Share Capital A/c (1,60,000 × ₹2)			3,20,000
	To Securities Premium Reserve A/c (1,60,000 × ₹1)			1,60,000
	(Being allotment money due)
4.	Bank A/c     ...Dr.		3,50,400
	To Share Allotment A/c			3,50,400
	(Being allotment money received except from Aditya)
5.	Share First & Final Call A/c     ...Dr.		6,40,000
	To Share Capital A/c (1,60,000 × ₹3)			4,80,000
	To Securities Premium Reserve A/c (1,60,000 × ₹1)			1,60,000
	(Being call money due)
6.	Bank A/c     ...Dr.		6,27,200
	To Share First & Final Call A/c			6,27,200
	(Being call money received except from Aditya)
7.	Share Capital A/c     ...Dr.		32,000
	Securities Premium Reserve A/c     ...Dr.		6,400
	To Share Allotment A/c			9,600
	To Share First & Final Call A/c			12,800
	To Forfeited Shares A/c			16,000
	(Being 3,200 shares forfeited due to non-payment of allotment and call money)
8.	Bank A/c     ...Dr.		43,000
	To Share Capital A/c			16,000
	To Securities Premium Reserve A/c			27,000
	(Being 1,600 shares reissued at premium)
9.	Forfeited Shares A/c     ...Dr.		8,600
	To Capital Reserve A/c			8,600
	(Being gain on reissue of forfeited shares transferred)