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Varun Ltd. Issued ₹ 10,00,000 Shares of ₹ 100 Each at a Premium of ₹ 20 for Subscription Payable As: - Accountancy

Journal Entry
Ledger

Varun Ltd. issued ₹ 10,00,000 shares of ₹ 100 each at a premium of ₹ 20 for subscription payable as:

₹ 10 per share on application,
₹ 40 per share and ₹ 10 premium on allotment, and
₹ 50 per share and ₹ 10 premium on final payment.

Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received.
Pass necessary entries in the company's books to record the above transactions. Also, prepare company's Balance Sheet on completion of the above transactions.

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Solution

Amount payable as:

Application

10

 

Allotment

50

(40 + 10)

First and Final Call

60

(50 + 10)

 

 

120

(100 + 20)

Books of Varun Limited
Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Bank A/c

Dr.

 

2,30,000

 

 

To Share Application A/c

 

 

2,30,000

 

(Share application money received for 23,000 shares at Rs 10 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

2,30,000

 

 

To Share Capital A/c

 

 

1,00,000

 

To Share Allotment A/c

 

 

50,000

 

To Bank A/c

 

 

80,000

 

(Share application of 10,000 shares transferred to Share Capital, Rs 50,000 adjusted on allotment and remaining amount returned)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

5,00,000

 

 

To Share Capital A/c

 

 

4,00,000

 

To Securities Premium A/c

 

 

1,00,000

 

(Share allotment due on 10,000 shares at Rs 50 each including Rs 10 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,50,000

 

 

To Share Allotment A/c

 

 

4,50,000

 

(Share allotment money received)

 

 

 

 

 

 

 

 

 

Share First and Final Call A/c

Dr.

 

6,00,000

 

 

To Share Capital A/c

 

 

5,00,000

 

To Securities Premium A/c

 

 

1,00,000

 

(First and final call due on 10,000 shares at Rs 60 each including Rs 10 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,00,000

 

 

To Share First and Final Call A/c

 

 

6,00,000

 

(Share first and final call money received) 

 

 

 

Posting in the Company's Balance Sheet

Varun Limited
Balance Sheet

Particulars

Note No.

Amount 

(₹)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

10,00,000

b. Reserves and Surplus

2

2,00,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

12,00,000

II. Assets

 

 

1.Non-Current Assets

 

 

2.Current Assets

 

 

a. Cash and Cash Equivalents

3

12,00,000

Total

 

12,00,000

NOTES TO ACCOUNTS 

Note No.

Particulars

Amount

(₹)

1

Share Capital

 

 

Authorised Share Capital

 

 

……  shares of Rs 100 each

-

 

Issued Share Capital

 

 

 10,000 shares of Rs 100 each

10,00,000

 

Subscribed, Called up and Paid up Share Capital

 

 

 10,000 shares of Rs 100 each

10,00,000

2

Reserves and Surplus

 

 

Securities Premium

2,00,000

3

Cash and Cash Equivalents

 

 

Cash at Bank

12,00,000

Working Notes:

Applied

Shares

Issued

Shares

Money received on Application

@ ₹ 10 each

Money transferred to Share Capital

 10 each

Excess

Allotment due

 @  50 each

Excess money adjusted on Allotment

Excess money after Allotment

12,000

 

1,000

 

1,20,000

 

10,000

 

1,10,000

 

50,000

 

50,000

 

60,000 (return)

2,000

NIL

20,000

20,000 (return)

 

 

 

9,000

9,000

90,000

90,000

4,50,000

23,000

10,000

2,30,000

1,00,000

 

5,00,000

50,000

60,000

Share Allotment due (10,000 share × ₹ 50)         5,00,000

Less: Excess application money
adjusted on allotment                                          50,000

Money received on Allotment                             4,50,000

  Is there an error in this question or solution?
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 1 Accounting for Share Capital
Exercise | Q 19 | Page 116
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