To provide employment to the youth and to develop the Naxal affected backward areas of Chhattisgarh. X Ltd. decided to set-up a power plant. For raising funds the company decided to issue 7, 50,000 equity shares of Rs.10 each at a premium of 50%. The whole amount was payable on application. Applications for 20,00,000 shares were received. Applications for 50,000 shares were rejected and shares were allotted to the remaining applicants on pro-rata basis.
Pass necessary journal entries for the above transactions in the books of the company and identify any two values which X Ltd. wants to propagate.
Solution
In the books of X Ltd
Journal
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|
Bank A/c Dr To Equity Share Application & Allotment A/c (Being amount received on 20, 00,000 equity shares @ Rs.10 each at a premium of 50%)
Equity Share Application & Allotment A/c Dr To Equity Share Capital A/c To Securities Premium A/c To Bank A/c (Being application money is transferred to share capital and excess amount refunded) |
3,00,00,000
3,00,00,000
|
3,00,00,000
75,00,000 37,50,000 1,87,50,000
|
The following are the two values that X Ltd. Wants to propagate.
1. Employment opportunities in the backward areas.
2. Value of Equality by allotting shares on pro-rata basis to 19,50,000 shareholders.
