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Prince Limited Issued a Prospectus Inviting Applications for 20,000 Equity Shares of Rs. 10 Each at a Premium of Rs. 3 per Share Payable as Follows: - Accountancy

Numerical

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

With Application

Rs. 2

On Allotment (including premium)

Rs. 5

On First Call

Rs. 3

On Second Call

Rs. 3

Applications were received for 30,000 shares and allotment was made on pro-rata basis. Money overpaid on applications 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 Rs. 9 per share, the whole of Mr. Mohit’s shares being included.

Record journal entries in the books of the Company and prepare the Balance Sheet.

 

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Solution

Books of Prince Limited

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Bank A/c

Dr.

 

60,000

 

 

 

To Share Application A/c

 

 

60,000

 

(Share Application money received on 30,000 shares @₹ 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 on 20,000 shares transferred to Share Capital Account and the balance 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 @ ₹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 @ ₹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

 

 

Securities 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 after first call)

 

 

 

 

 

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 except on 600 shares)

 

 

 

 

 

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

As per the Revised Schedule VI, the Balance Sheet of Prince Limited is as follows:

Prince Limited

Balance Sheet

 

Particulars

Note No.

Amount 

(₹)

I. Equity and Liabilities

 

 

1. Shareholders’ Fund

 

 

a. Share Capital

1

1,98,000

b. Reserves and Surplus

2

61,600

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 ₹10 each

-

 

Issued Share Capital

 

 

20,000 shares of ₹10 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

19,800 shares of ₹10 each

1,98,000

2

Reserves and Surplus

 

 

Securities Premium

58,800

 

 

Capital Reserve

2,800

61,600

3

Cash and Cash Equivalents

 

 

Cash at Bank

2,59,600

Working notes: 

1. Number of shares applied by Mohit 

= `"Total number of applied shares"/"Total number of alloted shares"xx"No. of shares alloted"`

`"3,00,000"/"2,00,000"xx"400=600 shares"`

Money received on Application

(600×2)

1,200

 

Less: Utilised on application

(400×2)

(800)

Excess amount received

 

400

Amount due on Allotment

(400×5)

2,000

 

Less: Excess amount received

 

(400)

Amount due on allotment

 

1,600

2. Amount to be transferred to Capital Reserve

Amount forfeited on Mohit’s 400 shares

1,200

Amount forfeited on Joly’s 600 shares

2,400

 

Amount forfeited on Joly’s 400 shares 

1,600

 

2,800

Less: Discount allowed on 800 shares reissued

(800)

Amount to be transferred to Capital Reserve

2,000

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APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 1 Accounting for Share Capital
Numerical Questions | Q 16 | Page 68
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