Question

Premio Ltd. issued 50,000 Equity Shares of ₹ 100 each at a premium of ₹ 50 per share, payable as follows:

₹ 100 per share on Application; and Balance on Allotment.

The issue was subscribed and shares were issued to the applicants. Pass the necessary Journal entries.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c Dr.		50,00,000
	To Shares Application A/c			50,00,000
	(Application money received on 50,000 shares @ ₹100 per share)
2.	Shares Application A/c Dr.		50,00,000
	To Share Capital A/c			50,00,000
	(Application money transferred to Share Capital)
3.	Shares Allotment A/c Dr.		25,00,000
	To Securities Premium A/c			25,00,000
	(Securities Premium due on 50,000 shares @ ₹50 per share)
4.	Bank A/c Dr.		25,00,000
	To Shares Allotment A/c			25,00,000
	(Allotment money received)

Working Note:

Application Money:

50,000 × ₹ 100 = ₹ 50,00,000

Premium/Allotment Money:

50,000 × ₹ 50 = ₹ 25,00,000​

Total amount received:

₹ 50,00,000 + ₹ 25,00,000 = ₹ 75,00,000​