Y Ltd. invited applications for issuing 80,000 equity shares of 10 each at a discount of 10%. The amount was payable as follows:
On applications and allotment - Rs 6 per share
On first and final call - the balance amount
Application for 2,00,000 shares were received. Applications for 40,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. All money was received except on 1,600 shares applied by Rohan. His shares were forfeited. The forfeited shares were re-issued at the maximum discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of Y Ltd.
Solution
| Journal Entries | ||||
| Date | Particulars | L.F. |
Debit Rs |
Credit Rs |
|
Bank A/c Dr. To Share Application and Allotment A/c (Being share application and allotment received on 2,00,000 of Rs 6 each including the discount of Rs 1 each ) |
12,00,000
|
12,00,000
|
||
|
Share Application and Allotment A/c Dr. Discount on Issue A/c Dr. To Share Capital A/c To Bank A/c To Share First and Final Call A/c (Being share application of 80,000 shares transferred to share capital, share application and allotment on 40,000 shares refunded and rest is adjusted to share first and final call) |
12,00,000 80,000
|
5,60,000 2,40,000 4,80,000
|
||
|
Share First and Final Call A/c Dr. To Share Capital A/c (Being share first and final call due on 80,000 shares of Rs 3 each) |
2,40,000
|
2,40,000
|
||
Computation Table
| Category | Share Applied |
Share Allotted |
Money received on Application and Allotment @ Rs 6 each including discount of Rs 1 each |
Money transfers to share capital@ Rs 7 each |
Money transfer to securities premium@ Rs 1 each |
Excess Application and Allotment money |
Share first and final call due @ Rs 3 each |
Money Refunded |
| I | 40,000 | Nil | 2,40,000 | 2,40,000 | ||||
| II | 1,60,000 | 80,000 | 9,60,000 | 5,60,000 | 80,000 | 4,80,000 | 2,40,000 | |
| 2,00,000 | 80,000 | 12,00,000 | 5,60,000 | 80,000 | 4,80,000 | 2,40,000 |
Working Note:
Those who applied for 1,60,000 shares, allotted = 80,000 Shares
Those who applied for 1,600 shares, allotted = `80000xx1600/160000`=- 800 share
Share Application and Allotment received on 1,600 shares of Rs 6 each (including the discount of Re 1 each) = Rs 9,600
Shares Allotted (800 x6) =Rs 4,800
Excess Application and Allotment money received = Rs 4,800
Share First and Final Call due on 800 shares of its 3 each = Rs 2,400
Excess Application and Allotment money received = Rs 4,800
Now, he has already paid an amount of Its 4,800 in excess at the time of application and allotment which is more than the amount due from him at the time of share final call. Thus, forfeiture is not possible in this case.
