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X Ltd. Invited Applications for Issuing 50,000 Equity Shares of Rs 10 Each. the Amount Was Payable as Follows: - Accountancy

X Ltd. invited applications for issuing 50,000 equity shares of Rs 10 each. The amount was payable as follows:

On Application : Rs 2 per share
On Allotment : Rs 2 per share
On First Call : Rs 3 per share
On Second and Final Call : Balance amount


Applications for 70,000 shares were received. Applications for 10,000 shares were rejected and the application money was refunded.
Shares were allotted to the remaining applicants on a pro-rata basis and excess money received with applications was transferred towards sums due on allotment and calls, if any.
Gopal, who applied for 600 shares, paid his entire share money with application. Ghosh, who had applied for 6,000 shares, failed to pay the allotment money and his shares were immediately forfeited. These forfeited shares were re-issued to Sultan for Rs 20,000; Rs 4 per share paid up. The first call money and the second and final call money was called and duly received.

Pass necessary journal entries for the above transactions in the books of X Ltd. Open Calls-in-Advance Account and Calls-in-Arrears Account wherever necessary.

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Solution

  Journal of X Ltd.

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

(i)

Bank A/c (Pro Rata Table)                                  Dr.

 

1,44,800

 

 

               To Equity Share Application A/c 

 

 

1,44,800

 

(Being application money received on 70,000 shares)

 

 

 

 

 

 

 

 

(ii)

Equity Share Application A/c                             Dr.

 

1,44,800

 

 

               To Equity Share Capital A/c (2*50,000)

 

 

1,00,000

 

               To Calls in Advance A/c

 

 

23,800

 

               To Bank A/c (2*10,000+10*100)

 

 

21,000

 

(Being application money received transferred to Share Capital, adjusted on allotment and excess refunded)

 

 

 

 

 

 

 

 

(iii)

Equity Share Allotment A/c (2*50,000)                 Dr.

 

1,00,000

 

 

               To Equity Share Capital A/c (2*50,000)

 

 

1,00,000

 

(Being allotment money due on 50,000 shares)

 

 

 

 

 

 

 

 

(iv)

Bank A/c                                                             Dr.

 

71,200

 

 

Calls in Advance A/c                                            Dr.          

 

20,800

 

 

Calls in Arrears A/c (WN 1)        Dr.                                                                            

 

8,000

 

 

              To Equity Share Allotment A/c (2*50,000)                    

 

 

1,00,000

 

(Being allotment money received except 5000 shares of Ghosh)

 

 

 

 

 

 

 

 

(v)

Share Capital A/c (5,000×4)        Dr.

 

20,000

 

 

     To Calls in Arrears A/c

 

 

8,000

 

       To Share Forfeiture A/c (6,000×2)

 

 

12,000

 

(Being 5000 shares of Ghosh forfeited due to non-payment of allotment money)

 

 

 

 

 

 

 

 

(vi)

Bank A/c                                    Dr.

 

20,000

 

 

       To Share Capital A/c(5,000×4)

 

 

20,000

 

(Being 5000 forfeited shares of Ghosh reissued to Sultan as Rs 4 paid-up)

 

 

 

 

 

 

 

 

(vii)

Share Forfeiture A/c                                                Dr.

 

12,000

 

 

      To Capital Reserve A/c

 

 

12,000

 

(Being amount forfeited transferred to Capital Reserve)

 

 

 

(viii)

Equity Share First Call A/c (3*50,000)                     Dr.

 

1,50,000

 

 

          To Equity Share Capital A/c (3*50,000)

 

 

1,50,000

 

(Being first call money due on 50,000 shares)

 

 

 

 

 

 

 

 

(ix)

Bank A/c                                                               Dr.

 

1,48,500

 

 

Calls in Advance A/c (3*500)                    Dr.

 

   1,500

 

 

          To Equity Share First Call A/c (3*50,000)                    

 

 

1,50,000

 

(Being First Call money received)

 

 

 

 

 

 

 

 

(x)

Equity Share Second & Final Call A/c (3*50,000)                                                                   Dr.                   

 

1,50,000

 

 

          To Equity Share Capital A/c (3*50,000)

 

 

1,50,000

 

(Being first call money due on 50,000 shares)

 

 

 

 

 

 

 

 

(xi)

Bank A/c                                                           Dr.

 

1,48,500

 

 

Calls in Advance A/c (3*500)                    Dr                                       

 

   1,500

 

 

          To Equity Share Second & Final Call A/c

 

 

1,50,000

 

(Being Second & Final Call money received)

 

 

 

 

Working Note    

Note No.

Particulars

Amount 

(Rs)

1

Computation of Calls in Arrears

 

 

Allotment Due on Ghosh’s Shares (2*5000)

10,000

 

Less: Excess on Application 2*(6000-5000#)

2,000

 

 

8,000

     

 

#No.  of Shares allotted to Ghosh = 6000*50,000/60,000

 

 

=5000

 
     
     
     
     
     

                                                Pro Rata Table

Shares Applied For( Rs.2)

Shares Allotted

( Rs.2)

Allotment

( Rs.2)

First Call

( Rs.3)

Second & Final Call

( Rs.3)

Refund

Units

Rs.

Units

Rs.

Rs.

Rs.

Rs.

Rs.

600

59,400

 

10,000

       6,000

1,18,800

 

    20,000

500

49,500

 

---------

1,000

99,000

 

--------

1,000

19,800

 

---------

1,500

--------

 

--------

1,500

----------

 

----------

  1,000

20,000

 

-------

70,000

1,44,800

50,000

1,00,000

20,000

1,500

1,500

21,000

Notes

 

 

Concept: Calls in Advance and Arrears
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