(Issue at discount and Pro-rate allotment)
Global IT Ltd. issued 1,00,000 shares of 10 each at a discount of 10% payable as follows-
| On Application | Rs 3 | On Allotment | Rs 3 (Discount) |
| On First Call | Rs 2 | On Second Call | Rs 1 |
Public applied for 1,20,000 shares and the directors made pro-rata allotment to the applicants.
Show the journal of the company assuming that all money received on allotment and calls.
Solution
| Share Applied | Shares Allotted |
| 1,20,000 | 1,00,000 |
Books of Global IT Ltd.
Journal Entry
| Date | Particulars | L.F. | Debit Amount (Rs.) | Credit Amount (Rs.) |
|
Bank A/c Dr |
360,000 | 360,000 | ||
|
Share Application A/c Dr. |
360,000 | 300,000 60,000 |
||
| Share Allotment A/c Dr. Discount A/c Dr. To Share Capital A/c (Share allotment due on 100,000 shares of Rs. 3 each, issued at discount of 10%) |
300,000 100,000 |
400,000 | ||
| Bank A/c (300,000 - 60,000) Dr. To Share Allotment A/c (Share application received) |
240,000 | 240,000 | ||
| Share First Call A/c Dr. To Share Capital A/c (Share first call due on 100,000 shares of Rs.2 each) |
200,000 | 200,000 | ||
|
Bank A/c Dr. |
200,000 | 200,000 | ||
| Share Final Call A/c Dr. To Share Capital A/c (Share final call due on 1,00,000 shares of Rs 1 each) |
100,000 | 100,000 | ||
| Bank A/c Dr. To Share Final Call A/c (Share first call received) |
100,000 | 100,000 |
Working Notes:
Money received on Application (1,20,000×3) = 360,000
Less: Application money transferred
to Share Capital 1,00,000×3 = 300,000
Excess money on application = 60,000
Allotment due on 1,00,000 Shares × Rs 3 = 300,0000
Less: Adjustment of excess money
on application = 60,000
Share Allotment Received = 240,000
