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Prepare Journal of Century Ltd. - Book Keeping and Accountancy

Journal Entry

(Forfeiture of shares issued at premium)
The Century Ltd. issued 8,000 shares of Rs 100 at a premium of 10% payable as under-

On Application Rs 25  On Allotment Rs 40 (including premium)
On First Call Rs 20 On Second Call Rs 25

Company called up allotment and both the calls which were duly received except Ramesh to whom 500 shares were allotted failed to pay allotment and calls. Prepare Journal of Century Ltd.

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                                   Books of Century Ltd
                                       Journal Entry

Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
  Bank A/c                                  Dr.
     To Share Application A/c
(Share application received on 8,000 shares of Rs 25 each)

  200,000 200,000
  Share Application A/c              Dr.
   To Share Capital A/c
(Share application transferred to Share Capital A/c)
  200,000 200,000
  Share Allotment A/c                 Dr.
  To Share Capital A/c
  To  Securities Premium A/c
(Share allotment due on 8,000 shares of Rs 40 each including Premium of Rs 10 each)
  320,000 240,000

Bank A/c                               Dr.
Calls-in-Arrears A/c              Dr.
    To Share Allotment A/c 
(Share allotment received)   

  Share First Call A/c                Dr.
   To Share Capital A/c
(Share first call due on 8,000 shares of Rs 20 each)
  Share Final Call A/c               Dr.
    To Share Capital A/c
(Share final call due on 8,000 share of Rs. 25 each0
  200,000 200,000
  Bank A/c                                Dr.
Call- in - Arrears A/c              Dr.
       To Share Final Call A/c
(Share final call received on 7,500 shares of Rs 25 each)

Working Notes:
Calls-in-Arrears on Share Allotment = 500 x 40 = Rs. 20,000 (including premium of Rs.10)
Calls-in-Arrears on First Call = 500 x 20 = Rs.10,000
Calls-in-Arrears on Final Call = 500 x 25 = Rs. 12,500

Concept: Accounting Treatment of Forfeiture and Re-issue of Share
  Is there an error in this question or solution?
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Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 10 Company Accounts Part - 1 (Accounting for Shares)
Exercise | Q 10 | Page 354
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