Question

Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹10 each at a premium of ₹ 3 per share payable as follows:

With application	---	₹2,
On allotment (including premium)	---	₹5,
On first call	---	₹3,
On second call	---	₹3.

Applications were received for 30,000 shares and allotment was made on pro rata basis. Money overpaid on application s was adjusted to the amount due on allotment. 
Mr Mohit whom 400 shares were allotted , failed to pay the allotment money and the first call , and his shares were forfeited after the first call . Mr Joly, whom 600 shares were allotted , failed to pay for the two calls and hence, his shares were forfeited .
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for  ₹ 9 per share , the whole of Mr Mohit's  shares being included.

Answer 1

Journal

Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c		Dr.		60,000
		To Share Application A/c				60,000
	(Application money received on 30,000 shares @ Rs 2 per share)
	Share Application A/c		Dr.		60,000
		To Share Capital A/c				40,000
		To Share Allotment A/c				20,000
	(Application money received transferred to Share Capital and adjusted on allotment)
	Share Allotment A/c		Dr.		1,00,000
		To Share Capital A/c				40,000
		To Securities Premium A/c				60,000
	(Allotment money due on 20,000 shares @ Rs 5 per share including premium of Rs 3 per share)
	Bank A/c (1,00,000 – 20,000 – 1,600)		Dr.		78,400
		To Share Allotment A/c				78,400
	(Allotment money received)
	Share First Call A/c		Dr.		60,000
		To Share Capital A/c				60,000
	(Share First Call due on 20,000 shares @ Rs 3 per share)
	Bank A/c (60,000 – 1,200 – 1,800)		Dr.		57,000
		To Share First Call A/c				57,000
	(First call money received)
	Share Capital A/c		Dr.		2,800
	Share Premium A/c		Dr.		1,200
		To Share Forfeiture A/c				1,200
		To Share Allotment A/c				1,600
		To Share First Call A/c				1,200
	(400 shares forfeited)
	Share Second Call A/c		Dr.		58,800
		To Share Capital A/c				58,800
	(Final Call money due on 19,600 shares @ 3 per share)
	Bank A/c (58,800 – 1,800)		Dr.		57,000
		To Share Second Call A/c				57,000
	(Second Call money received)
	Share Capital A/c		Dr.		6,000
		To Share Forfeiture A/c				2,400
		To Share First Call A/c				1,800
		To Share Second Call A/c				1,800
	(600 shares forfeited)
	Bank A/c		Dr.		7,200
	Share Forfeiture A/c		Dr.		800
		To Share Capital A/c				8,000
	(800 shares reissued @ Rs 9 each)
	Share Forfeiture A/c		Dr.		2,000
		To Capital Reserve				2,000
	(Profit on re–issue transferred to Capital Reserve)

Balance Sheet

Particulars	Note No.	Amount  (₹)
I. Equity and Liabilities
1. Shareholders’ Fund
a. Share Capital	1	1,98,800
b. Reserves and Surplus	2	60,800
2. Non-Current Liabilities
3. Current Liabilities
Total		2,59,600
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,59,600
Total		2,59,600

NOTES TO ACCOUNTS  

Note No.	Particulars			Amount
1	Share Capital
	Authorised Share Capital
	…….. shares of Rs 10 each			–
	Issued Share Capital
	20,000 shares of Rs 10 each			2,00,000
	Subscribed, Called–up and Paid–up Share Capital
	19,800 shares of Rs 10 each	1,98,000		1,98,800
	Add: Share Forfeiture (200 × 4)	800
2	Reserves and Surplus
	Securities Premium		58,800	60,800
	Capital Reserve		2,000
3	Cash and Cash Equivalents
	Cash at Bank			2,59,600

Working Notes :  

WN 1: Calculation of unpaid amount on allotment by Mohit 

Shares applied by Mohit = `30000 / 2000 xx 400 = 600`

Money received on Application		(600×2)	1,200
Less: Adjusted on application		(400×2)	(800)
Excess amount received			400

 

Amount due on Allotment		(400×5)	2,000
Less: Excess amount received			(400)
Amount unpaid on allotment			1,600

WN 2: Calculation of Amount to be transferred to Capital Reserve  

Amount forfeited on Mohit’s 400 shares(600×2)	1,200
Amount forfeited on Joly’s 400 shares (400 × 4)	1,600
Total Credit Balance in Share Forfeiture	2,800
Less: Discount allowed on 800 shares reissued	(800)
Amount to be transferred to Capital Reserve	2,000