Question

Star Ltd was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20,000 such shares at a premium of ₹ 2 per share, payable as ₹ 2 per share on application, ₹ 5 per share on allotment (including premium) and ₹ 2 per share on first call made three months later. All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares and another shareholder holding 1,000 shares failed to pay the first call money.
Pass journal entries to record the above transactions and show how they will appear in the company's Balance Sheet.

Answer 1

Amount Payable on:

Application	₹	2
Allotment	₹	5	(3+2)
First Call	₹	2
Called-up	₹	9	(7+2)

Books of Star Ltd.
Journal

Date	Particulars		L.F.	Debit Amount  (₹)	Credit  Amount (₹)
	Bank A/c	Dr.		40,000
	To Share Application A/c				40,000
	(Share application money received for 20,000 shares at Rs 2 per share)
	Share Application A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(Share application of 20,000 shares at Rs 2 per share transferred to Share Capital Account)
	Share Allotment A/c	Dr.		1,00,000
	To Share Capital A/c				60,000
	To Securities Premium A/c				40,000
	(Share allotment due on 20,000 shares at Rs 5 per share including Rs 2 premium)
	Bank A/c	Dr.		1,00,000
	To Share Allotment A/c				1,00,000
	(Share allotment received on 20,000 shares at Rs 5 per share)
	Share First Call A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(Share first call due on 20,000 shares at Rs 2 per shares)
	Bank A/c	Dr.		38,900
	Calls-in-Arrears A/c	Dr.		2,000
	To Share First Call A/c				40,000
	To Calls-in-Advance A/c				900
	(Share first call received on 39,000 shares at Rs 2 each, 300 shares paid calls-in-advance at Rs 3 per share and 1,000 shares failed to pay to first call money)

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows. 

Star Ltd.
Balance Sheet

Particulars	Note No.	Amount  (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,38,000
b. Reserves and Surplus	2	40,000
2. Non-Current Liabilities
3. Current Liabilities
a. Other Current Liabilities	3	900
Total		1,78,900
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	4	1,78,900
Total		1,78,900

NOTES TO ACCOUNTS 

Note No.	Particulars		Amount (₹)
1	Share Capital
	Authorised Share Capital
	50,000 shares of Rs 10 each		5,00,000
	Issued Share Capital
	20,000 shares of Rs 10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	20,000 shares of Rs 10 each, Rs 7 Called-up and Paid-up	1,40,000
	Less: Calls-in-Arrears	(2,000)	1,38,000
2	Reserves and Surplus
	Securities Premium		40,000
3	Other Current Liabilities
	Calls-in-Advance		900
4	Cash and Cash Equivalents
	Cash at Bank		1,78,900