Question

Shiva Ltd. invited applications for issuing 2,00,000 Equity Shares of ₹100 each at a premium of ₹60 per share. The amount was payable as follows:

On application ₹30 per share (including premium ₹10).
On allotment ₹70 per share (including premium ₹50).
On first and final call the balance amount.

Applications for 1,90,000 shares were received. Shares were allotted to all the applicants and the company received all money due on allotment except Jain who had been allotted 1,000 shares, and his shares were immediately forfeited. Afterwards first and final call was made. Gupta did not pay the first and final call on his 2,000 allotted shares. His shares were also forfeited. 50% of the forfeited shares of both Jain and Gupta were re-issued for ₹90 per share fully paid up.
Pass necessary journal entries in the books of Shiva Ltd. for the above transactions.

Answer 1

Journal entries In the books of Shiva Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		57,00,000
	To Share Application A/c			57,00,000
	(Being application money received: 1,90,000 × ₹30)
2.	Share Application A/c     ...Dr.		57,00,000
	To Equity Share Capital A/c			38,00,000
	To Securities Premium Reserve A/c			19,00,000
	(Being application money transferred: capital ₹20 & premium ₹10 per share)
3.	Share Allotment A/c     ...Dr.		1,33,00,000
	To Equity Share Capital A/c			38,00,000
	To Securities Premium Reserve A/c			95,00,000
	(Being allotment due: ₹70 incl. premium ₹50 on 1,90,000 shares)
4.	Bank A/c     ...Dr.		1,32,30,000
	To Share Allotment A/c			1,32,30,000
	(Being allotment received except Jain: 1,000 × ₹70 not received)
5.	Equity Share Capital A/c     ...Dr.		40,000
	Securities Premium Reserve A/c     ...Dr.		50,000
	To Share Allotment A/c			70,000
	To Share Forfeiture A/c			20,000
	(Being forfeiture of Jain’s 1,000 shares for non‑payment of allotment; amount received = application capital ₹20/share)
6.	First & Final Call A/c     ...Dr.		1,13,40,000
	To Equity Share Capital A/c			1,13,40,000
	(Being call due @ ₹60 on 1,89,000 shares; Jain’s shares already forfeited)
7.	Bank A/c     ...Dr.		1,12,20,000
	To First & Final Call A/c			1,12,20,000
	(Being call received except Gupta: 2,000 × ₹60 unpaid)
8.	Equity Share Capital A/c     ...Dr.		2,00,000
	To First & Final Call A/c			1,20,000
	To Share Forfeiture A/c			80,000
	(Being forfeiture of Gupta’s 2,000 shares for non‑payment of call; amount received earlier towards capital = ₹40/share)
9.	Bank A/c     ...Dr.		1,35,000
	Share Forfeiture A/c     ...Dr.		15,000
	To Equity Share Capital A/c			1,50,000
	(Being re‑issue of 1,500 forfeited shares @ ₹90 fully paid; discount ₹10/share)
10.	Share Forfeiture A/c     ...Dr.		35,000
	To Capital Reserve A/c			35,000
	(Being surplus on re‑issue transferred to Capital Reserve)

Working Note:

1) Components per share
Application ₹30 = Cap ₹20 + SP ₹10
Allotment ₹70 = Cap ₹20 + SP ₹50
Call = ₹60

2) Amounts actually received
Allotment received = 1,90,000 × ₹70 − 1,000 × ₹70 = ₹1,32,30,000
First & Final Call received = (1,89,000 × ₹60) − (2,000 × ₹60) = ₹1,12,20,000