Question

OTUA Ltd. was registered with an authorised capital of 2,00,000 equity shares of ₹ 100 each. The company offered 60,000 shares for public subscription at 25% premium. The share was payable as ₹ 40 on application and balance on allotment, with premium. Public had applied for 85,000 shares. Pro-rata allotment was made in the ratio of 5:4 and remaining applications were sent letters of regret.

Mr. Anand holding 4,000 shares failed to pay allotment money and his shares were forfeited. Out of these 3,000 shares were re-issued at a discount of ₹ 20 per share. Pass necessary entries in the books of OTUA Ltd.

Answer 1

Books of OTUA Ltd. Journal Entries
Date	Particulars	L.F	Debit (₹)	Credit (₹)
1.	Bank A/c    ....Dr.		34,00,000
	To Equity Share Application A/c			34,00,000
	(Application money received on 85,000 shares)
2.	Equity Share Application A/c    ...Dr.		34,00,000
	To Equity Share Capital A/c			24,00,000
	To Equity Share Allotment A/c			6,00,000
	To Bank A/c			4,00,000
	(Application money transferred to share capital, share allotment and refunded)
3.	Equity Share Allotment A/c   ...Dr.		51,00,000
	To Equity Share Capital A/c			36,00,000
	To Securities Premium A/c			15,00,000
	(Allotment due on 60,000 shares with Premium)
4.	Bank A/c   ...Dr.		42,00,000
	Calls in Arrears A/c   ...Dr.		3,00,000
	To Equity Share Allotment A/c			45,00,000
	(Allotment received on 56,000 shares)
5.	Equity Share Capital A/c    ....Dr.		4,00,000
	Securities Premium A/c    ...Dr.		1,00,000
	To Share Forfeited A/c			2,00,000
	To Calls in Arrears A/c			3,00,000
	(4,000 shares forfeited for non-payment of allotment money)
6.	Bank A/c    ...Dr.		2,40,000
	Share Forfeited A/c   ...Dr.		60,000
	To Equity Share Capital A/c			3,00,000
	(3,000 shares re-issued @ ₹ 80 per share)
7.	Share Forfeited A/c   ...Dr.		90,000
	To Capital Reserve A/c			90,000
	(Gain on re-issue of forfeited shares transferred to capital reserve)