Question

Seiko Watches Ltd. invited applications for 50,000 shares of ₹ 10 each payable ₹ 3 on application, ₹ 4 on allotment and balance on first and final call. Applications were received for 60,000 shares. Applications were accepted for 50,000 shares and remaining applications were rejected. All calls were made and received except First and Final call on 500 shares.

Pass the Journal entries in the books of Seiko Watches Ltd.

Answer 1

Journal Entries in the Books of Seiko Watches Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		1,80,000
	To Shares Application A/c			1,80,000
	(Application money received on 60,000 shares @ ₹ 3 per share)
2.	Shares Application A/c   ...Dr.		1,80,000
	To Share Capital A/c			1,50,000
	To Bank A/c			30,000
	(Application money transferred on 50,000 shares and money on rejected applications refunded)
3.	Shares Allotment A/c   ...Dr.		2,00,000
	To Share Capital A/c			2,00,000
	(Allotment money due on 50,000 shares @ ₹ 4 per share)
4.	Bank A/c   ...Dr.		2,00,000
	To Shares Allotment A/c			2,00,000
	(Allotment money received)
5.	Shares First and Final Call A/c   ...Dr.		1,50,000
	To Share Capital A/c			1,50,000
	(First and Final Call money due on 50,000 shares @ ₹ 3 per share)
6.	Bank A/c   ...Dr.		1,48,500
	Calls-in-Arrears A/c   ...Dr.		1,500
	To Shares First and Final Call A/c			1,50,000
	(First and Final Call money received except on 500 shares)

Working note:

Shares issued: 50,000 shares

Shares applied for: 60,000 shares

Rejected applications:

60,000 − 50,000 = 10,000 shares

Application money received:

60,000 × ₹ 3 = ₹ 1,80,000

Application money required:

50,000 × ₹ 3 = ₹ 1,50,000

Application money refunded:

10,000 × ₹ 3 = ₹ 30,000

First and Final Call per share:

₹ 10 − (₹ 3 + ₹ 4) = ₹ 3

Calls-in-Arrears:

500 × ₹ 3 = ₹ 1,500