Question

Sudesh Ltd. was registered with an authorised capital of ₹ 40,00,000 divided into 4,00,000 Equity Shares of ₹ 10 each.

The company offered 50,000 shares to the public at a premium of ₹ 2 per share, payable as follows:

₹ 3 on application

₹ 6 on allotment (including premium)

₹ 3 on first and final call (due two months after allotment)

Applications were received for 60,000 shares and pro-rata allotment was made as follows:

Category A: The applicants of 40,000 shares were allotted 30,000 shares.

Category B: The applicants of 20,000 shares were allotted in full.

Excess money paid on application was utilized towards allotment.

Nobby, a shareholder from Category A, who had applied for 1,200 shares failed to pay the allotment and call money.

Vineet, a shareholder from Category B, who had been allotted 1,000 shares, paid the call money due, along with allotment.

The company forfeited Nobby’s shares after the first and final call and paid interest on Calls-in-advance to Vineet @ 12% per annum on the day of the final call.

You are required to:

1. Pass journal entries to record the above transactions in the books of the company (including entries for interest on Calls-in-advance).
2. Prepare Calls-in-arrears Account.

Answer 1

Journal entries In the books of Sudesh Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c    ...Dr.		1,80,000	-
	To Share Application A/c		-	1,80,000
	(Being Application money received)
2.	Share Application A/c    ...Dr.		1,80,000	-
	To Share Capital A/c		-	1,50,000
	To Share Allotment A/c		-	30,000
	(Being Application money transferred to share capital)
3.	Share Allotment A/c    ...Dr.		3,00,000	-
	To Share Capital A/c		-	2,00,000
	To Securities Premium Reserve A/c		-	1,00,000
	(Being Allotment money due on 50,000 equity shares @ ₹ 6 each)
4.	Bank A/c    ...Dr.		2,68,500	-
	Calls in Arrears A/c    ...Dr.		4,500	-
	To Share Allotment A/c		-	2,70,000
	To Calls in Advance A/c		-	3,000
	(Being Allotment money and Calls in Advance received)
5.	Share First and Final Call A/c    ...Dr.		1,50,000	-
	To Share Capital A/c		-	1,50,000
	(Being First and Final Call money due on 50,000 equity shares @ ₹ 3 each)
6.	Bank A/c    ...Dr.		1,44,300	-
	Calls in Arrears A/c    ...Dr.		2,700	-
	Calls in Advance A/c    ...Dr.		3,000	-
	To Share First and Final Call A/c		-	1,50,000
	(Being First and Final call money received)
7.	Share Capital A/c    ...Dr.		9,000	-
	Securities Premium Reserve A/c    ...Dr.		1,800	-
	To Calls in Arrears A/c		-	7,200
	To Share Forfeiture A/c		-	3,600
	(Being 900 Shares forfeited)
8.	Interest on Calls-in-Advance A/c    ...Dr.		60	-
	To Sundry Members A/c		-	60
	(Being Interest due on Calls-in-Advance)
9.	Sundry Members A/c    ...Dr.		60	-
	To Bank A/c		-	60
	(Being Interest paid on Calls-in-Advance)
10.	Statement of Profit & Loss    ...Dr.		60	-
	To Interest on Calls-in-Advance A/c		-	60
	(Being Interest on Calls in advance transferred to Statement of Profit & Loss)

 

Dr.	Calls in arrears A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Share Allotment A/c	4,500	By Share Capital A/c	5,400
To Share First & Final Call A/c	2,700	By Securities Premium Reserve A/c	1,800
	7,200		7,200

Working Note:

1) Shares allotted to Nobby: `1200 xx 30000/40000 = 900`

Excess application money received from Nobby:

(1,200 − 900) × 3

= 900

	₹
Amount due on allotment from Nobby = 900 × ₹ 6	5,400
Less: Excess received on application	(900)
Amount not received from Nobby on allotment	4,500

2) 

	₹
Total amount due on allotment: 50,000 × ₹ 6	3,00,000
Less: Excess received on allotment	(30,000)
	2,70,000
Less: Not received on allotment	(4,500)
	2,65,500
Add: Calls Received in Advance	(3,000)
	2,68,500

3) Interest on Calls in Advance:

= `3000 xx 12/100 xx 2/12` 

= ₹ 60