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Xyz Ltd. Invited Applications for Issuing 50,000 Equity Shares of ₹10 Each . the Amount Was Payable As: - Accountancy

Journal Entry

XYZ Ltd. invited applications for issuing 50,000 Equity Shares of  ₹10 each . The amount was payable as:

      On application      ---    ₹ 3 per share,
      On allotment      ---    ₹ 4 per share,
     On first and final call      ---    ₹ 3 per share.

Applications were received for 75,000 shares and pro rata allotment was made as: 
Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis.
Applicants for 35,000 shares were allotted 30,000 shares on pro rata basis.
Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment .
Shamu, who had applied for 700 shares out of the group applying for 35,000 shares , failed to pay the first  and final call . His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. 8 per share as fully paid-up. The reissued  shares included all the forfeited shares of Shamu.
Pass necessary Journal entries to record the above transactions.

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Solution

Issued 1,000 equity shares of Rs 10 each

Applied 1,800 shares

Allotment made as:

 

Amount payable per shares as:

Applied

 

Allotted

 

Application

Rs 3

40,000

 

30,000 

 

Allotment

Rs 4

35,000

 

20,000

 

First Call

Rs 3

1,800

 

1,000

 

 

Rs 10

Books of XYZ Limited

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bank A/c

Dr.

 

2,25,000

 

 

To Equity Share Application A/c

 

 

2,25,000

 

(Share application money received for 75,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

2,25,000

 

 

To Equity Share Capital A/c

 

 

1,50,000

 

To Equity Share Allotment A/c

 

 

75,000

 

(Application money of 50,000 shares transferred to share capital and the remaining amount adjusted on allotment)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

2,00,000

 

 

To Equity Share Capital A/c

 

 

2,00,000

 

(Share allotment due on 50,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,21,400

 

 

To Equity Share Allotment A/c

 

 

1,21,400

 

(Share allotment received on 48,800 shares after adjusting the excess money on application)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c (1,200 × Rs 7)

Dr.

 

8,400

 

 

To Share Forfeiture A/c

 

 

4,800

 

To Equity Share Allotment A/c

 

 

3,600

 

(1,200 shares of Rs 10 each Rs 7 called-up forfeited for the non-payment of allotment)

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

1,46,400

 

 

To Equity Share Capital A/c

 

 

1,46,400

 

(First and final call due on 48,800 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,45,200

 

 

To Equity Share First and Final Call A/c

 

 

1,45,200

 

(Share first and call received 48,800 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

4,000

 

 

To Share Forfeiture A/c (400 × Rs 7)

 

 

2,800

 

To Equity Shares First and Final Call A/c

 

 

1,200

 

(400 shares forfeited for the non-payment of first and final call)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

8,000

 

 

Share Forfeiture A/c

Dr.

 

2,000

 

 

To Equity Share Capital A/c

 

 

10,000

 

(1,000 shares of Rs 10 each re-issued at Rs 8 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

3,200

 

 

To Capital Reserve A/c

 

 

3,200

 

(Balance of 1,000 re-issued shares in Share Forfeiture Account transferred to Capital Reserve Account)

 

 

 

Working Notes-

Rumu’s Share

Number of shares applied = `40000 / 30000 xx 1200 = 1600 "Shares"`

Money received on Application 1,600 shares × Rs 3 =  Rs. 4800
Money adjusted on Application 1200 shares × Rs 3 =  Rs. 3600
Excess on Application Rs. 1200

 

Allotment due on 1,200 shares × Rs 4 = 

4800

Less: Excess money on Application 

1200
Calls-in-Arrears on Allotment 3600

Share Allotment

Share Allotment due 50,000 shares × Rs 4 = 

200000
Less: Excess money on application  75000
  125000
Less: Calls-in-Arrears on Allotment  3600
Money received on Allotment 121400

Shamu’s Shares

Number of shares allotted to Shamu=`20000/35000 xx 700 = 400 "Shares"`  

First and Final Call

First and Final Call due; 48,800 shares × Rs 3

=

1,46,400

Less: Calls-in-Arrears by Shamu; 400 shares × Rs 3

=

1,200

Money received on of First and Final Call

 

1,45,200

Capital Reserve

Shares re-issued out the shares forfeited from Ramu = 1,000 shares − Shamu’s shares

= 1,000 − 400

= 600 shares

on re-isssue Ramu’s shares:

Capital Reverse on re-issue of 600 shares forfeited from Ramu

Share Forfeiture Cr. 

=

Rs

4

 

Share Forfeiture Dr.

=

Rs

2

 

Share Forfeiture after re-issued

 

Rs

2

per share

Capital Reserve after re-issue of 600 shares = Share Forfeiture after re-issue (per share) × 600 shares

= Rs 2 × 600

= Rs 1,200

on re-isssue Shamu’s shares:

Share Forfeiture

Cr.

Rs 7

 

Share Forfeiture

Dr.

Rs 2

 

Share Forfeiture after re-issue

Rs 5

per share

Capital Reserve after re-issue of 400 shares = Share Forfeiture after re-issue (per share) × 600 shares

= Rs 5 × 400

= Rs 2,000

Total amount of Capital Reserve = Capital Reserve of 600 shares + Capital Reserve of 400 shares

Total amount of Capital Reserve

= Capital Reserve of 600 shares + Capital Reserve of 400 shares

 

= Rs 1,200 + Rs 2,000

 

= Rs 3,200 

  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 89 | Page 129
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