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'Subham Ltd.' Invited Applications for Issuing 12,000 Equity Shares of Rs 10 Each at a Premium of Rs 3 per Share. the Amount Was Payable as Follows: Pass Necessary Journal Entries for the Above Transactions in the Books of the Company - CBSE (Arts) Class 12 - Accountancy

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Question

'Subham Ltd.' invited applications for issuing 12,000 equity shares of Rs 10 each at a premium of Rs  3 per share. The amount was payable as follows:

On application and allotment - Rs 6 per share (Including Premium)
On the first call - Rs 4 per share
On second and final call - the balance

Applications for 18,000 shares were received and pro-rata allotment was made to all the applicants. Excess money received with applications was adjusted towards sums due on the first call. All calls were made and were duly received except the first call and second and final call on 120 shares allotted to Vibhu. His shares were forfeited. The forfeited shares were reissued at the maximum permissible discount as per the provisions of the Companies Act, 1956.

Pass necessary Journal Entries for the above transactions in the books of the company

Solution

Books of Subham 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 18,000 shares)

 

1,08,000

 

 

 

1,08,000

 

 

Equity Share Application A/c  Dr.

  To Equity Share Capital A/c

  To Securities Premium A/c

  To Equity Share First Call A/c

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

 

1,08,000

 

 

 

 

 

 

36,000

36,000

36,000

 

 

 

Equity Share First And  Final Call   Dr.

    To Equity Share Capital A/c

(Being First and Final Call money due)

 

48,000

 

 

 

48,000

 

 

Bank A/c    Dr.

  To Equity Share First A/c

(Being money received on First and Final Call)

 

11,880

 

 

 

11,880

 

 

Equity Share Second and Final A/c    Dr.

   To Equity Share Capital A/c

(Being amount due on second and final call)

 

36,000

 

 

 

36,000

 

 

Bank A/c (36,000 – 360)     Dr.

   To Equity Share Second and Final Call A/c

Being amount received on second and final call)

 

35,640

 

 

 

35,640

 

 

Equity Share Capital A/c   Dr.

   To Equity Share Forfeiture A/c

   To Equity Share First A/c

   To Equity Share Second and Final Call A/c

(Being shares of Vibhu forfeited)

 

1,200

 

 

 

 

 

720

120

360

 

 

Bank A/c   Dr.

Equity Share Forfeiture A/c   Dr. 

  To Equity Share Capital A/c

(Being forfeited shares were reissued for Rs 9 as fully paid up)

 

480

720

 

 

 

 

 

1,200

 

 

Working Notes :

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

Shares applied by Vibhu = `18000/12000 xx 120` = 180 shares

Amount received on 180 shares of 6 each = Rs 1,080
Amount transferred to Share Capital A/c (120x3) = Rs  360
Amount transferred to Securities Premium A/c (120 x 3) = Rs 360
Excess money received on Application and Allotment = Rs 360
Amount due on First Call @ 4 each = Rs  480
Amount not received on First Call = 120 (480 – 360)
Amount received on First Call = 11,880 (48,000 – 36,000 – 120)

  Is there an error in this question or solution?

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Solution 'Subham Ltd.' Invited Applications for Issuing 12,000 Equity Shares of Rs 10 Each at a Premium of Rs 3 per Share. the Amount Was Payable as Follows: Pass Necessary Journal Entries for the Above Transactions in the Books of the Company Concept: Pro-rata Allotment.
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