Question

Zenith Ltd. invited applications for 1,00,000 Equity shares of ₹10 each to the public payable as follows:

Application ₹3

Allotment ₹4

First and Final Call ₹3

Applications were received for 1,50,000 shares and pro rata allotment was made as under :

Applicants for 80,000 shares were allotted 60,000 shares on a pro-rata basis. Applicants for 70,000 shares were allotted 40,000 shares on a pro-rata basis. It was decided to utilise the excess application money towards allotment.

Maneesh, to whom 2,400 shares were allotted, out of the group applying for 80,000 shares did not pay the allotment money. His shares were immediately forfeited after allotment. These shares were reissued for ₹6 per share as ₹7 paid up.

Sunder who had applied for 1400 shares out of the group applying for 70,000 shares, did not pay the first and final call. His shares were also forfeited.

Out of the forfeited shares of Sunder, 600 shares were sold at ₹11 per share as fully paid.

Pass necessary journal entries to record the above transactions in the books of the company.

Answer 1

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c ...Dr.		4,50,000
	To Equity Share Application A/c			4,50,000
	(Being application money received on 1,50,000 shares @ ₹3 each)
2.	Equity Share Application A/c ...Dr.		4,50,000
	To Equity Share Capital A/c			3,00,000
	To Equity Share Allotment A/c			1,50,000
	(Being application money transferred to Share Capital for 1,00,000 shares and excess adjusted against allotment)
3.	Equity Share Allotment A/c ...Dr.		4,00,000
	To Equity Share Capital A/c			4,00,000
	(Being allotment money due on 1,00,000 shares @ ₹4 each)
4.	Bank A/c ...Dr.		2,42,800
	To Equity Share Allotment A/c			2,42,800
	(Being allotment money received, excluding Maneesh's arrears)
5.	Equity Share Capital A/c (2,400 × ₹7) ...Dr.		16,800
	To Equity Share Allotment A/c (Arrears)			7,200
	To Share Forfeiture A/c (Amount paid)			9,600
	(Being 2,400 shares of Maneesh forfeited immediately after allotment for non-payment of allotment money)
6.	Bank A/c (2,400 × ₹6) ...Dr.		14,400
	Share Forfeiture A/c (2,400 × ₹1) ...Dr.		2,400
	o Equity Share Capital A/c			16,800
	(Being 2,400 forfeited shares reissued to Maneesh @ ₹6 per share as ₹7 paid up)
7.	Share Forfeiture A/c ...Dr.		7,200
	To Capital Reserve A/c			7,200
	(Being gain on reissue of Maneesh's shares transferred to Capital Reserve)
8.	Equity Share First & Final Call A/c ...Dr.		3,00,000
	To Equity Share Capital A/c			3,00,000
	(Being first & final call money due on 1,00,000 shares @ ₹3 each)
9.	Bank A/c ...Dr.		2,97,600
	To Equity Share First & Final Call A/c			2,97,600
	(Being first & final call money received except on 800 shares held by Sunder)
10.	Equity Share Capital A/c (800 × ₹10) ...Dr.		8,00,000
	To Equity Share First & Final Call A/c (Arrears)			2,400
	To Share Forfeiture A/c (Amount paid)			5,600
	(Being 800 shares of Sunder forfeited for non-payment of first & final call)
11.	Bank A/c (600 × ₹11) ...Dr.		6,600
	To Equity Share Capital A/c (600 × ₹10)			6,00,000
	To Securities Premium A/c (600 × ₹1)			600
	(Being 600 forfeited shares of Sunder reissued @ ₹11 per share as fully paid)
12.	Share Forfeiture A/c ...Dr.		4,200
	To Capital Reserve A/c			4,200
	(Being gain on reissue of 600 shares of Sunder transferred to Capital Reserve)