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Jeevan Dhara Ltd. Invited Applications for Issuing 1,20,000 Equity Shares of Rs 10 Each at a Premium of Rs 2 per Share. the Amount Was Payable as Follows: Pass Necessary Journal Entries for the Above Transactions in the Books of Jeevan Dhara Ltd. - CBSE (Arts) Class 12 - Accountancy

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Question

Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payable as follows:

On application - Rs 2 per share
On allotment - Rs 5 per share (including premium)
On first and final call - balance

Applications for 1,50,000 share were received. Shares were allotted to all the applicants on pro-rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who has applied for 3,000 shares failed to pay the amount due on an allotment and first and final call. Madhur who was allotted 2,400 shares failed to pay the first and final call. Shares of both Manu and Madhur were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.

Solution

Books of Jeevan Dhara Ltd.
Journal
Date Particulars L.F.

Dr.

Rs

Cr.

Rs

 

Bank A/c    Dr.

    To Equity Share Application A/c

(Being application money received on 1,50,000 shares)

 

3,00,000

 

 

 

3,00,000

 

 

Equity Share Application A/c  Dr.

   To Equity Share Capital A/c

   To Equity Share Allotment A/c

(Being amount of application transferred to share capital and excess money is adjusted towards allotment)

 

3,00,000

 

 

 

 

 

2,40,000

60,00

 

 

 

Equity Share Allotment A/c   Dr.

   To Equity Share Capital A/c

   To Securities Premium A/c

(Being amount due on allotment)

 

6,00,000

 

 

 

 

3,60,000

2,40,000

 

 

Bank A/c    Dr.

  To Equity Share Allotment A/c

(Being amount received on share allotment)

 

5,29,200

 

 

 

5,29,200

 

 

Equity Share First & Final Call  Dr.

    To Equity Share Capital A/c

(Being First and Final Call money due)

 

6,00,000

 

 

 

6,00,000

 

 

Bank A/c    Dr.

   To Equity Share First and Final Call A/c

(Being money received on First and Final Call)

 

5,76,000

 

 

 

5,76,000

 

 

Equity Share Capital A/c   Dr.

Securities Premium A/c    Dr.

   To Equity Share Forfeiture A/c

   To Equity Share Allotment A/c

   To Equity Share First and Final Call A/c

(Being shares of Manu and Madhur forfeited)

 

48,000

4,800

 

 

 

 

 

 

18,000

10,800

24,000

 

 

Bank A/c   Dr.

Equity Share Forfeiture A/c   Dr.

   To Equity Share Capital A/c

(Being re-issue of forfeited share @ Rs 9 as fully paid up)

 

43,200

4,800

 

 

 

 

48,000

 

 

Equity Share Forfeiture A/c   Dr.

   To Capital Reserve A/c

(Being excess amount of forfeiture transferred to capital
reserve)

 

13,200

 

 

 

13,200

 

Working Notes:

WN1: Calculation of Amount not received on Allotment on First and Final Call

Shares allotted to Manu = `120000/150,000 xx 3000` = 2,400 shares

Amount received on 3,000 shares of Rs 2 each = Rs 6,000
Amount transferred to share Capital (2,400 x 2) = Rs 4,800
Excess money received on application = Rs 1,200
Amount due on Allotment @ Rs 5 each = Rs 12,000 (7,200 + 4,800)
Amount not received on Securities Premium = Rs 4,800
Amount not received on allotment = Rs 6,000 (7,200 – 1,200)
Amount not received on first and final call = Rs 12,000 (2,400 x 5)

WN2: Calculation of amount not received from Madhur
Amount not received on first and final call = 12,000 (2,400 x 5)

  Is there an error in this question or solution?

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Solution Jeevan Dhara Ltd. Invited Applications for Issuing 1,20,000 Equity Shares of Rs 10 Each at a Premium of Rs 2 per Share. the Amount Was Payable as Follows: Pass Necessary Journal Entries for the Above Transactions in the Books of Jeevan Dhara Ltd. Concept: Pro-rata Allotment.
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