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Page No 8.117:

Question 1:

Gopal Ltd. was registered with an authorised capital of ₹ 50,00,000 divided into Equity Shares of ₹  100 each . The company offered for public subscription all the shares . Public applied for 45,000 shares and allotment was made to all the applicants. All the calls were made and were duly received except the final call of ₹  20 per share on 500 shares.
Prepare the Balance Sheet of the company showing the different types of share capital.

Answer:

Gopal Ltd.

Balance Sheet

Particulars

Note No.

Amount

(Rs)

I.  Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

44,99,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

44,99,000

 

 

 

II.  Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

44,99,000

Total

 

44,99,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

5,00,000 equity shares of Rs 10 each

50,00,000

 

Issued Share Capital

 

 

 5,00,000 equity shares of Rs 10 each

50,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 4,50,000 equity shares of Rs 10 each

45,00,000

 

 

Less: Calls in Arrears (500 shares × Rs 2)

  (1,000)

44,99,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

44,99,000

 

 

 

Page No 8.117:

Question 2:

Himmat Ltd has authorised share capital of ₹  50,00,000 divided into 5,00,000 Equity Shares of ₹  10 each . It has existing issued and paid up capital of ₹  5,00,000. It further issued to public 1,50,000 Equity Shares at par for subscription payable as under:

 On Application:     ₹ 3
 On Allotment:    ₹ 4 and
 On Call:    Balance Amount.

The issue was fully subscribed and allotment was made to all the applicants . Call was made during the year and was duly received.
Show share capital of the company in the Balance Sheet of the Company.

Answer:

Balance Sheet of Himmat Ltd.

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

20,00,000

Total

 

20,00,000

 

 

 

II. Assets

 

 

2. Current Assets

 

 

  1. Cash and Cash Equivalents

2

20,00,000

Total

 

20,00,000

 

 

 

 

Notes to Accounts

 

Particulars

Amount

(Rs)

1. Share Capital

 

Authorised Share Capital

 

5,00,000 Equity Shares of Rs 10 each

50,00,000

Issued Share Capital

 

50,000 Equity Shares of Rs 10 each

5,00,000

 

1,50,000 Equity Shares of Rs 10 each

15,00,000

20,00,000

Subscribed and Paid-up Share Capital

 

50,000 Equity Shares of Rs 10 each

5,00,000

 

1,50,000 Equity Shares of Rs 10 each

15,00,000

20,00,000

 

 

2. Cash and Cash Equivalents

 

Bank

20,00,000

 

 

Page No 8.117:

Question 3:

Lennova Ltd. has authorised share capital of ₹ 1,00,00,000  divided into 1,00,000 Equity Shares of ₹  100 each . It has existing issued and paid up capital of ₹  25,00,000. It further issued to public 25,000 Equity Shares at a premium of 20% for subscription payable as under:
 On Application:     ₹ 30
 On Allotment:    ₹ 60 and
 On Call:    Balance Amount.

The issue was fully subscribed and allotment was made to all the applicants . The company did not make the call during the year.
Show share capital of the company in the Balance Sheet of the Company.

Answer:

Balance Sheet of Lennova Ltd.

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

42,50,000

b. Reserves and Surplus

2

5,00,000

Total

 

47,50,000

 

 

 

II Assets

 

 

2. Current Assets

 

 

  1. Cash and Cash Equivalents

3

47,50,000

Total

 

47,50,000

 

 

 

 

Notes to Accounts

Particulars

Amount

(Rs)

1. Share Capital

 

Authorised Share Capital

 

1,00,000 Equity Shares of Rs 100 each

1,00,00,000

Issued Share Capital

 

25,000 Equity Shares of Rs 100 each

25,00,000

 

25,000 Equity Shares of Rs 100 each

25,00,000

50,00,000

Subscribed Share Capital

 

Subscribed and Fully paid-up

 

25,000 Equity Shares of Rs 100 each

25,00,000

Subscribed but not fully paid-up

 

25,000 Equity Shares of Rs 100 each, 70 called-up

17,50,000

 

 

2. Reserves and Surplus

 

Securities Premium Reserve
(25,000 shares @ Rs 20 per share)

5,00,000

 

 

3. Cash and Cash Equivalents

 

Bank

47,50,000

 

 

Page No 8.117:

Question 4:

A company issued 2,50,000 Equity Shares of ₹ 10 each to public. All amounts have been received in lump sum. Pass necessary journal entries in the books of the company.

Answer:

Authorised Capital 2,50,000 equity shares of Rs 10 each

Issued and Subscribed Capital 2,50,000 shares

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

25,00,000

 

 

To Equity Share Application A/c

 

 

25,00,000

 

(Share application money received for 2,50,000 equity shares of Rs 10 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

25,00,000

 

 

To Equity Share Capital A/c

 

 

25,00,000

 

(Share application of 2,50,000 equity shares of Rs 10 each transferred to Equity Share Capital Account )

 

 

 

 

 

 

 

 

Page No 8.117:

Question 5:

The authorised capital of ₹ 16,00,000 of XYZ Ltd. is divide into 1,60,000 Equity Shares of ₹ 10 each. Out of these shares , 80,000 Equity Shares were issued at par to public for subscription . The full nominal value is payable on application . All the shares were subscribed by the public and total amount was paid for . Pass necessary journal entries in the books of the company .

Answer:

Authorised Capital 1,60,000 equity shares of Rs 10 each

Issued and Subscribed Capital 80,000 equity shares

Books of XYZ Limited

Journal

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

8,00,000

 

 

To Equity Share Application A/c

 

 

8,00,000

 

(Share application money received for 8,000 Equity Shares of Rs 10 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

8,00,000

 

 

To Equity Share Capital A/c

 

 

8,00,000

 

(Share application of 80,000 shares of Rs 10 each transferred to Equity Share Capital Accounts)

 

 

 

 

 

 

 

 

Page No 8.117:

Question 6:

XYZ Ltd. invited applications for 10,000 shares of ₹ 100 each payable as follows:
₹  20 on application, ₹  30 on allotment, ₹  20 on first call and the balance on final call.
All the shares were applied and allotted. All the money was duly received.
You are required to journalise these transactions.

Answer:

Issued and Subscribed Capital 10,000 shares of ₹ 100 each
Payable as:
 

20 on application
30 on allotment
20 on first call
30 on final call
  100  
 

Books of XYZ Limited

Journal

Date

Particulars

L.F.

Debit

Amount

()

Credit

Amount

()

 

 

 

 

 

 

Bank A/c

Dr.

 

2,00,000

 

 

To Share Application A/c

 

 

2,00,000

 

(Share application money received for 10,000 shares at ₹ 20 per share)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

2,00,000

 

 

To Share Capital A/c

 

 

2,00,000

 

(Share application of 10,000 shares of ₹ 20 each transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

3,00,000

 

 

To Share Capital A/c

 

 

3,00,000

 

(Share allotment due on 10,000 shares at ₹ 30 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,00,000

 

 

To Share Allotment A/c

 

 

3,00000

 

(Share allotment money received for 10,000 Shares at ₹ 30 per share)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

2,00,000

 

 

To Share Capital A/c

 

 

2,00,000

 

(Share first call due on 10,000 shares at ₹ 20 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,00,000

 

 

To Share First call A/c

 

 

2,00,000

 

(Share first call received on 10,000 shares at ₹ 20 per share)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

3,00,000

 

 

To Share Capital A/c

 

 

3,00,000

 

(Share Final call due on 10,000 shares at 30 per shares)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,00,000

 

 

To Share Final Call A/c

 

 

3,00,000

 

(Share final call received on 10,000 shares at ₹ 30 per share)

 

 

 

 

 

 

 

 

Page No 8.117:

Question 7:

Marigold Ltd . was registered with the authorized capital of ₹ 3,00,000 divided into 3,000 shares of ₹ 100 each, which were offered to the public . Amount payable as ₹ 30  per share on application , ₹ 40 per share on allotment and ₹ 30 per share on first and final call . These shares were fully subscribed and all money  was dully received . Prepare journal and Cash Book.

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
 
Share Application A/c
Dr.
 
90,000
 
 
To Share Capital
 
 
 
90,000
 
(Share application money transferred)
 
 
 
 
 
 
 
 
 
 
 
Share Allotment A/c
Dr.
 
1,20,000
 
 
To Share Capital A/c
 
 
 
1,20,000
 
(Share allotment money transferred)
 
 
 
 
 
 
 
 
 
 
 
Share First and Final Call A/c
Dr.
 
90,000
 
 
To Share Capital A/c
 
 
 
90,000
 
(Share first and final call money transferred)
 
 
 
 
 
Cash Book
Dr.  
Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Share Application A/c

90,000

Balance c/d

3,00,000

Share Allotment A/c
1,20,000
 
 
Share First and Final Call A/c
90,000
 
 
 
3,00,000
 
3,00,000
 
 
   

Page No 8.117:

Question 8:

A company was registered with an authorised capital of 10,00,000 divided into 7,500 Equity Shares of ₹  100 each and, 2,500 Preference Shares of 100 each. 1,000 Equity and 500; 9% Preference Shares were offered to public on the following terms Equity Shares payable 
10 on application, 40 on allotment and the balance in two calls of ₹  25 each. Preference Shares are payable ₹ 25 on application , ₹ 25 on allotment and 50 on first and final call. All the shares were applied for and allotted . Amount due was duly received . Prepare Cash Book and pass necessary journal entries to record the above issue of shares and show how the Share Capital will appear in the Balance Sheet.

Answer:

Authorised Capital:

Equity Shares 7,500 of Rs 100 each.

9% Preference Shares 2,500 of Rs 100 each.

Issued Capital:

Equity Shares 1,000 of Rs 100 each.

Payable as

Rs 10 on Application

Rs 40 on Allotment

Rs 25 on First Call

Rs 25 on Final Call

Preference Shares 500 of Rs 100 each.

Payable as

Rs 25 on application

Rs 25 on allotment

Rs 50 on first and final call

Cash Book

Dr.

 

Cr.

Date

Particulars

L.F.

Bank

 Rs

Date

Particulars

L.F.

Bank

 Rs

 

 

 

 

 

 

 

 

 

Equity Share Application

 

10,000

 

 

 

 

 

Preference Share Application

 

12,500

 

 

 

 

 

Equity Share Allotment

 

40,000

 

 

 

 

 

Preference Share Allotment

 

12,500

 

 

 

 

 

Equity Share First Call

 

25,000

 

 

 

 

 

Preference Share First and Final Call

 

25,000

 

 

 

 

 

Equity Share Final Call

 

25,000

 

Balance c/d

 

1,50,000

 

 

 

 

 

 

 

 

 

 

 

1,50,000

 

 

 

1,50,000

 

 

 

 

 

 

 

 

 

Journal

 

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

 Rs

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

10,000

 

 

To Equity Share Capital A/c

 

 

10,000

 

(Equity share application of 1,000 shares of Rs 10 each transferred to Equity Share Capital Account)

 

 

 

 

 

 

 

 

 

Preference Share Application A/c

Dr.

 

12,500

 

 

To 9% Preference Share Capital A/c

 

 

12,500

 

(Preference share applications of 500 shares Rs 25 each transferred to 9% Preference Share Capital Account)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

40,000

 

 

To Equity Share Capital A/c

 

 

40,000

 

(Equity share allotment due on 1,000 shares at Rs 40 each)

 

 

 

 

 

 

 

 

 

Preference Share Allotment A/c

Dr.

 

12,500

 

 

To 9% Preference Share Capital A/c

 

 

12,500

 

(Preference share allotment due on 500 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

25,000

 

 

To Equity Share Capital A/c

 

 

25,000

 

(Equity share first call due on 1,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Preference Share First and Final Call A/c

Dr.

 

25,000

 

 

To 9% Preference Share Capital A/c

 

 

25,000

 

(Preference share first and final call due on 500 shares at Rs 50 each)

 

 

 

 

 

 

 

 

 

Equity Share Final Call A/c

Dr.

 

25,000

 

 

To Equity Share Capital A/c

 

 

25,000

 

(Equity share final call due on 1,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 


Balance Sheet

Particulars

Note No.

Amount

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,50,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

1,50,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

1,50,000

Total

 

1,50,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

75,000 Equity Shares of Rs 100 each

7,50,000

 

 

25,000 9% Preference Shares of Rs 100 each

2,50,000

10,00,000

 

Issued Share Capital

 

 

 1,000 Equity Shares of Rs 100 each

1,00,000

 

 

 500 9% Preference Shares of Rs 100 each

50,000

1,50,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 1,000 Equity Shares of Rs 100 each

1,00,000

 

 

 500 9% Preference Shares of Rs 100 each

50,000

1,50,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

1,50,000

 

 

 



Page No 8.118:

Question 9:

Shiva Ltd . issued 1,00,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share . The whole amount was payable on application. The issue was fully subscribed . Pass necessary Journal entries.

Answer:

Issued 1,00,000 equity shares of Rs 10 each at a premium of Rs 5

Applied 1,00,000 shares

Books of Shiva Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

15,00,000

 

 

To Equity Share Application and Allotment A/c

 

 

15,00,000

 

(Share application and allotment money received for 1,00,000 Shares at Rs 15 each including Rs 5 premium)

 

 

 

 

 

 

 

 

 

Equity Share Application and Allotment A/c

Dr.

 

15,00,000

 

 

To Equity Share Capital A/c

 

 

10,00,000

 

To Securities Premium A/c

 

 

5,00,000

 

(Application and allotment money of 1,00,000 shares transferred to Equity Share Capital Account at Rs 10 each and Securities Premium at Rs 5 each)

 

 

 

 

 

 

 

 

Page No 8.118:

Question 10:

A limited company offered for subscription 10,000 shares of ₹ 25 each , payable ₹ 5 per share on application , ₹ 10 per share on allotment ( including ₹ 5 per share as premium), ₹ 5 per share as first call on the shares and the balance in two equal amounts at intervals of three months . All the shares were applied for and allotted . All the money was received except the second call and final call on 200 and 400 shares respectively.
You are asked to show the entries in the company 's Journal , Cash Book  and the ledger . Also show the company's Balance Sheet oncompletion of the above transaction. 

Answer:

Issued 10,000 shares of Rs 25 each at premium of Rs 5

Applied 10,000 shares

Payable as:

Application

Rs

5

 

Allotment

Rs

10

(5 + 5)

First Call

Rs

5

 

Second Call

Rs

5

 

Final Call

Rs

5

 

 

Rs

30

(25 + 5)

 

Cash Book

Dr.

Cr.

Date

Particulars

L.F.

Bank

 Rs

Date

Particulars

L.F.

Bank

 Rs

 

 

 

 

 

 

 

 

 

Share Application

 

50,000

 

 

 

 

 

Share Allotment

 

1,00,000

 

 

 

 

 

Share First Call

 

50,000

 

 

 

 

 

Share Second Call

 

49,000

 

 

 

 

 

Share Final Call

 

48,000

 

Balance c/d

 

2,97,000

 

 

 

2,97,000

 

 

 

2,97,000

 

 

 

 

 

 

 

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Application A/c

Dr.

 

50,000

 

 

To Share Capital A/c

 

 

50,000

 

(Application money of 10,000 shares of Rs 5 each transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

1,00,000

 

 

To Share Capital A/c

 

 

50,000

 

To Securities Premium A/c

 

 

50,000

 

(Share allotment of 10,000 shares transferred to Share Capital at Rs 5 each

and Securities Premium at Rs 5 each)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

50,000

 

 

To Share Capital A/c

 

 

50,000

 

(First call due on 10,000 shares

at Rs 5 each)

 

 

 

 

 

 

 

 

 

Share Second Call A/c

Dr.

 

50,000

 

 

To Share Capital A/c

 

 

50,000

 

(Second call due on 10,000 shares at 5 each)

 

 

 

 

 

 

 

 

 

Call-in-Arrears A/c

Dr.

 

1,000

 

 

To Share Second Call A/c

 

 

1,000

 

(Second call outstanding on 200 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

50,000

 

 

To Shares Capital A/c

 

 

50,000

 

(Final call due on 50,000 shares of Rs to 5 per shares)

 

 

 

 

 

 

 

 

 

Calls-in-Arrears A/c

Dr.

 

2,000

 

 

To Shares Final Call A/c

 

 

2,000

 

(Final call outstanding on 400 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

Share Application Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

 Rs

Date

Particulars

L.F.

Amount

Rs

 

 

 

 

 

 

 

 

 

Share Capital

 

50,000

 

Bank

 

50,000

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

Share Allotment Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

 Rs

Date

Particulars

L.F.

Amount

Rs

 

 

 

 

 

 

 

 

 

Share Capital

 

50,000

 

Bank

 

1,00,000

 

Securities Premium

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,00,000

 

 

 

1,00,000

 

 

 

 

 

 

 

 

 

Share First Call Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

Rs

Date

Particulars

L.F.

Amount

Rs

 

 

 

 

 

 

 

 

 

Share Capital

 

50,000

 

Bank

 

50,000

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

Share Second Call Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

Rs

Date

Particulars

L.F.

Amount

Rs

 

 

 

 

 

 

 

 

 

Share Capital

 

50,000

 

Bank

 

49,000

 

 

 

 

 

Calls-in-Arrears

 

1,000

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

Share Final Call Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

Rs

Date

Particulars

L.F.

Amount

Rs

 

 

 

 

 

 

 

 

 

Share Capital

 

50,000

 

Bank

 

48,000

 

 

 

 

 

Calls-in-Arrears

 

2,000

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

                   

 

Call-in-Arrears Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

Rs

Date

Particulars

L.F.

Amount

Rs

 

 

 

 

 

 

 

 

 

Share Second Call

 

1,000

 

 

 

 

 

Share Final Call

 

2,000

 

 

 

 

 

 

 

 

 

Balance c/d

 

3,000

 

 

 

3,000

 

 

 

3,000

 

 

 

 

 

 

 

 

                   

 

Share Capital Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

Rs

Date

Particulars

L.F.

Amount

 Rs

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Application

 

50,000

 

 

 

 

 

Share Allotment

 

50,000

 

 

 

 

 

Share First Call

 

50,000

 

 

 

 

 

Share Second

 

50,000

 

Balance c/d

 

2,50,000

 

Share Final Call

 

50,000

 

 

 

2,50,000

 

 

 

2,50,000

 

 

 

 

 

 

 

 

                   

 

Securities Premium Account

Dr.

 

Cr.

Date

Particulars

L.F.

Amount

Rs

Date

Particulars

L.F.

Amount

 Rs

 

 

 

 

 

 

 

 

 

Balance c/d

 

50,000

 

Share Allotment

 

50,000

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

                   

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

 

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

2,47,000

b. Reserves and Surplus

2

50,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

2,97,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

2,97,000

Total

 

2,97,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount 

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

……. shares of Rs 25 each

 

Issued Share Capital

 

 

 10,000 shares of Rs 25 each

2,50,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

10,000 shares of Rs 25 each

2,50,000

 

 

    Less: Calls-in-Arrears

(3,000)

2,47,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

50,000

   

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

2,97,000

 

 

 

Page No 8.118:

Question 11:

X Ltd., was incorporated with a capital of ₹ 2,00,000 divided into shares of ₹ 10 each . 2,000 shares were offered to the public and out of these , 1,800 shares were applied for and allotted .₹ 3 per share ( including ₹ 1 premium) was payable  on  application , ₹ 4 per share (including ₹ 1 premium ) on allotment,  ₹ 2 per share on first call and v 3 per share on final call . All the money was received . Give necessary journal entries and the Balance Sheet .

Answer:

Authorised Capital 20,000 shares of Rs 10 each

Issued Capital 2,000 shares

Applied 1,800 shares

Payable as:

 

 

 

Application

Rs

3

(2+1)

Allotment

Rs

4

(3+1)

First Call

Rs

2

 

Final Call

Rs

3

 

 

 

12

(10+2)

 

Books of X Limited

Journal 

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

5,400

 

 

To Share Application A/c

 

 

5,400

 

(Application money received for 1,800 shares at Rs 3 per shares)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

5,400

 

 

To Share Capital A/c

 

 

3,600

 

To Securities Premium A/c

 

 

1,800

 

(Application money of 1,800 share transferred to Share Capital at Rs 2 per share and Securities Premium Re 1 per share)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

7,200

 

 

To Share Capital A/c

 

 

5,400

 

To Securities Premium A/c

 

 

1,800

 

(Share allotment due on 1,800 shares at Rs 4 per share including Re 1 securities premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

7,200

 

 

To Share Allotment A/c

 

 

7,200

 

(Share Allotment money received)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

3,600

 

 

To Share Capital A/c

 

 

3,600

 

(Share first call due on 1,800 shares at Rs 2 per shares)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,600

 

 

To Share First Call A/c

 

 

3,600

 

(Share first call money received)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

5,400

 

 

To Share Capital A/c

 

 

5,400

 

(Share final call due on 1,800 shares at Rs 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

 

5,400

 

 

To Share Final Call A/c

Dr.

 

 

5,400

 

(Share final call money received)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

X Ltd.

Balance Sheet

Particulars

Note No.

Amount

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

18,000

b. Reserves and Surplus

2

3,600

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

21,600

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

21,600

Total

 

21,600

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

20,000 shares of Rs 10 each

2,00,000

 

Issued Share Capital

 

 

 2,000 shares of Rs 10 each

20,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,800 shares of Rs 10 each

18,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

3,600

   

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

21,600

 

 

 

Page No 8.118:

Question 12:

Authorized capital of Suhani Ltd . is ₹ 45,00,000 divided into 30,000 shares of ₹ 150 each . Out of these  company issued 15,000 shares of ₹ 150 each at a premium of ₹ 10 per share . the amount was payable as follows:
₹ 50 per share on application , ₹ 40 per share on allotment (including premium ), ₹ 30 per share on firs t call and balance on final call . Public applied for 14,000 shares.  All the money was duly received .
Prepare an extract of Balance Sheet of Suhani Ltd . as per Schedule III , Part I of the companies Act, 2013 disclosing the above information . Also prepare 'Notes to Accounts ' for the same.

Answer:

Suhani Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

21,00,000

b. Reserves and Surplus

2

1,40,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

22,40,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

22,40,000

Total

 

22,40,000

 

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

30,000 shares of Rs 150 each

45,00,000

 

Issued Share Capital

 

 

 15,000 shares of Rs 150 each

22,50,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 14,000 shares of Rs 150 each

21,00,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

1,40,000

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

22,40,000

 

 

 

Page No 8.118:

Question 13:

SRCC Ltd. was registered with a capital of ₹ 25,00,000 in shares of ₹ 10 each. It issued a prospectus inviting applications for 25,000 shares at 40% premium payabl;e as follows :
On application ₹ 5 (including ₹ 1 premium) , on Allotment ₹ 4 (including ₹ 1 premium) , on first call  ₹ 3 (including ₹ 1 premium) , on second and final call ₹ 2 (including ₹ 1 premium) . 
Applications were received for 25,000 shares . All money was duly received . Pass the necessary Journal entries.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Bank A/c (25,000×5)

Dr.

 

1,25,000

 

 

  To Equity Share Application A/c

 

 

 

1,25,000

 

( Application Money Received)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application A/c (25,000×5)

Dr.

 

1,25,000

 

 

  To Equity Share Capital A/c (25,000×4)

 

 

 

1,00,000

 

  To Security Premium Reserve A/c (25,000×1)

 

 

 

25,000

 

(Application money adjusted towards Share Capital)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c (25,000×4)

Dr.

 

1,00,000

 

 

  To Equity Share Capital A/c (25,000×3)

 

 

 

75,000

 

  To Security Premium Reserve A/c (25,000×1)

 

 

 

25,000

 

( Allotment money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (25,000×4)

Dr.

 

1,00,000

 

 

   To Equity Share Allotment A/c

 

 

 

1,00,000

 

(Allotment money received)

 

 

 

 

 

 

 

 

 

 

 

 Equity Share First Call A/c (25,000×3)

Dr.

 

75,000

 

 

  To Equity Share Capital A/c (25,000×2)

 

 

 

50,000

 

  To Security Premium Reserve A/c (25,000×1)

 

 

 

25,000

 

(First call money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (25,000×3)

Dr.

 

75,000

 

 

  To Equity Share First Call A/c

 

 

 

75,000

 

(First call money received)

 

 

 

 

 

 

 

 

 

 

 

 Equity Share Second Call A/c (25,000×2)

Dr.

 

50,000

 

 

  To Equity Share Capital A/c (25,000×1)

 

 

 

25,000

 

  To Security Premium Reserve A/c (25,000×1)

 

 

 

25,000

 

(Second call money due)

 

 

 

 

 

 

 

 

 

 

 

 Bank A/c (25,000×2)

Dr.

 

50,000

 

 

  To Equity Share Second Call A/c

 

 

 

50,000

 

(Second call money received)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 8.118:

Question 14:

X Ltd. invited application for 10,000 Equity Shares of ₹ 10 each issued at par . The amount was payable on application . The issue was oversubscribed by 2,000 shares and allotment was made on pro rata basis. Pass necessary Journal entries.

Answer:

Issued Capital 10,000 shares of Rs 10 each

Applied 12,000 shares

Over-subscribed by 2,000 shares

Books of X Limited

Journal 

Date

Particulars

Debit

Amount

Rs

Credit Amount

Rs

 

 

 

 

 

Bank A/c

Dr.

1,20,000

 

 

To Share Application A/c

 

1,20,000

 

(Share Application received for 12,000 shares at Rs 10 each)

 

 

 

 

 

 

 

Share Application A/c

Dr.

1,20,000

 

 

To Share Capital A/c

 

1,00,000

 

To Bank A/c

 

20,000

 

(Application of 10,000 shares transferred to Share Capital and of 2,000 hares returned)

 

 

 

 

 

 

Page No 8.118:

Question 15:

Citizen Watches Ltd. invited applications for 50,000 shares of ₹ 10 each payable ₹ 3 on application , ₹ 4 on allotment and balance  on first  and final call . Applications were received for 60,000 shares . Applications were accepted for 50,000 shares and remaining applications were rejected . All calls were made and received except First and Final call on 500 shares .

Pass the journal entries in the books of Citizen Watches Ltd .

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Bank A/c (60,000×3)

Dr.

 

1,80,000

 

 

  To Share Application A/c

 

 

 

1,80,000

 

(Received application money on 60,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

1,80,000

 

 

  To Share Capital A/c (50,000×3)

 

 

 

    1,50,000

 

  To Bank A/c (10,000×3)

 

 

 

30,000

 

(Transfer of application money to Share Capital)

 

 

 

 

 

 

 

 

 

 

 

Share Allotment A/c (50,000×4)

Dr.

 

2,00,000

 

 

  To Share Capital A/c

 

 

 

2,00,000

 

(Allotment due on 50,000 shares )

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,00,000

 

 

  To Share Allotment A/c

 

 

 

2,00,000

 

(Allotment received)

 

 

 

 

 

 

 

 

 

 

 

Share First and Final Call A/c (50,000×3)

Dr.

 

1,50,000

 

 

  To Share Capital A/c

 

 

 

1,50,000

 

(Call money due on 50,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (49,500×3)

Dr.

 

1,48,500

 

 

  To Share First and Final Call A/c

 

 

 

1,48,500

 

(Received call money on 49,500 shares)

 

 

 

 

 

 

 

 

 

Page No 8.118:

Question 16:

ABC Company Ltd.offered for subscription 20,000 shares of ₹ 10 each payable ₹ 3 on application and ₹ 5  on allotment for each share. Applications were received  fro 30,000 shares . Letters of regret were issued to applicants for 5,000 shares  and their application money was refunded . Application  money for  other 5,000 shares was applied towards  the payment for allotment money .  The balance of allotment  money was also received in due time .
You are to prepare the journal , Cash Book , Ledger Accounts and the Balance Sheet  of the company. 

Answer:

Issued Capital

20,000 shares at Rs 10 each

Applied

30,000 shares

Over-subscribed

10,000 shares

 

Applied

Allotted

Over-subscribed

25,000

20,000

5,000

5,000

NIL

5,000

30,000

20,000

10,000

 

 

 

Payable as:

Rs

3

on application

Rs

5

on allotment

 

8

Called-up

 

Cash Book

Dr.

 

Cr.

Date

Particulars

L.F.

Bank

Rs

Date

Particulars

L.F.

Bank

Rs

 

 

 

 

 

 

 

 

 

Share Application

 

 

 

Share Application

 

 

 

(30,000 shares × Rs 3)

 

90,000

 

(5,000 shares × Rs 3)

 

15,000

 

Share Allotment

 

85,000

 

 

 

 

 

 

 

 

 

Balance c/d

 

1,60,000

 

 

 

1,75,000

 

 

 

1,75,000

 

 

 

 

 

 

 

 

 

Journal

Date

Particulars

L.F.

Debit

 Amount

 Rs

Credit Amount

 Rs

 

 

 

 

 

 

Share Application A/c

Dr.

 

75,000

 

 

To Share Capital A/c

 

 

60,000

 

To Share Allotment A/c

 

 

15,000

 

(Share application of 20,000 shares at Rs 3 each transferred to Share Capital Account and excess money Rs 15,000 transferred to allotment)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

1,00,000

 

 

To Share Capital A/c

 

 

1,00,000

 

(Share allotment due on 20,000 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

ABC Company Ltd.

Balance Sheet

Particulars

Note No.

Amount

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,60,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

1,60,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

1,60,000

Total

 

1,60,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount   (Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

…… shares of Rs 10 each

 

Issued Share Capital

 

 

 20,000 shares of Rs 10 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 20,000 shares of Rs 10 each, on which Rs 8 called-up and paid-up

1,60,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

1,60,000

 

 

 

Page No 8.118:

Question 17:

Eastern Company Limited , having an authorised capital of ₹ 10,00,000 divided into shares of ₹  10 each , issued 50,000 shares at a premium of ₹  3 per share payable as follows:

 On Application     ₹ 3 per share;
 On Allotment (including premium)    ₹ 5 per share;
 On first call (due three months after allotment )and the balance as when required.    ₹ 3 per share;
 

Applications were received for 60,000 shares and the directors allotted the shares as follows:
(i) Applicants for 40,000 shares received in full.
(ii) Applicants for 15,000 shares received an allotment of 8,000 shares.
(iii) Applicants for 5,000 shares received 2,000 shares on allotment , excess money being returned.
All amounts due on allotment were received.
The first call was made and the money was received except on 100 shares.
Give journal and cash book entries to record these transactions of the company . Also prepare the Balance Sheet of the company.

Answer:

Books of Eastern Company Limited

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

  Share Application A/c
Dr.
 
1,80,000
 
    To Share Capital A/c    
1,50,000
    To Share Allotment A/c    
30,000
  (Share Application money for 50,000 shares transferred To Share Capital Account and the excess money transferred To Share Allotment Account)      
         
  Share Allotment A/c
Dr.
 
2,50,000
 
    To Share Capital A/c    
1,00,000
    To Share Premium A/c    
1,50,000
  (Allotment money due on 50,000 shares @ Rs 5 per share including Rs 3 security premium)      
         
  Share First Call A/c
Dr.
 
1,50,000
 
    To Share Capital A/c      
1,50,000
  (First call due on 50,000 shares @ Rs 3 per share)        
 

Cash Book (Bank Column)

Dr.            

Cr.

Date

Particulars

J.F.

Amount

(₹)

Date

Particulars

J.F.

Amount

(₹)

  Share Application  

1,80,000

       
  Share Allotment  

2,20,000

  Balance c/d  

5,49,700

  Share First Call  

1,49,700

       
     

5,49,700

     

5,49,700

               
 

Eastern Company Limited

Balance Sheet

Particulars

Note No.

Amount 

(₹)

I. Equity and Liabilities    
1. Shareholders’ Funds
   
a. Share Capital

1

3,99,700

b. Reserves and Surplus
2
1,50,000
2. Non–Current Liabilities
   
3. Current Liabilities
   

Total

 

5,49,700

II. Assets    
1. Non–Current Assets
   
2. Current Assets
   
a. Cash and Cash Equivalents

3

5,49,700

Total

 

5,49,700

     

NOTES TO ACCOUNTS
Note No.
Particulars
Amount  
(₹)
1
Share Capital  
  Authorised Share Capital  
  1,00,000 shares of Rs 10 each
10,00,000
  Issued Share Capital  
   50,000 shares of Rs 10 each
5,00,000
  Subscribed, Called up and Paid up Share Capital  
   50,000 shares of Rs 10 each, Rs 8 called–up
4,00,000
 
   Less: Calls–in–Arrears
     (300)
3,99,700
2
Reserves and Surplus  
  Securities Premium
1,50,000
     
3
Cash and Cash Equivalents  
  Cash at Bank
5,49,700



Page No 8.119:

Question 18:

X company issued ₹ 10,00,000 shares for subscription of ₹ 100 each at a premium of ₹ 20 per share 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.

Answer:

Amount payable as:

Application

Rs

10

 

Allotment

Rs

50

(40 + 10)

First and Final Call

Rs

60

(50 + 10)

 

 

120

(100 + 20)

 

Books of X Company

Journal

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit

Amount

 Rs

 

 

 

 

 

 

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

X Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

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

(Rs)

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

@ Rs 10 each

Money transferred to Share Capital

@ Rs 10 each

Excess

Allotment due

 @ Rs 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 × Rs 50)

5,00,000

Less: Excess application money adjusted on allotment

50,000

Money received on Allotment

4,50,000

 

Page No 8.119:

Question 19:

Sugandh Ltd. issued 60,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as ₹ 3 on application, ₹ 5(including premium) on allotment and the balance on first and final call. Applications were received for 92,000 shares. The Directors resolved to allot as:

      (i)       Applicants of 40,000 shares  30,000 shares,
      (ii)      Applicants of 50,000 shares  30,000 shares,
      (iii)     Applicants of 2,000 shares  Nil.

Mohan, who had applied for 800 shares in Category
(i) and Sohan, who was allotted 600 shares in Category
(ii) failed to pay the allotment money. Calculate amount received on allotment.

Answer:

Issued Shares

60,000

Less: Applied Shares

92,000

Over-subscribed Shares

32,000

Payable as:

Rs

3

on Application

Rs

5

on Allotment (Including Rs 2 premium)

Rs

4

on First and Final Call

Rs

12

(10 + 2)

 

 

 

 

 

 

 

 

Applied

Allotted

Money Received on Application

@ Rs 3

Money adjusted on Appliction

@ Rs 3

Excess

Allotment due

@ Rs 5

Excess money adjusted on Allotment

@ Rs 5

40,000

­30,000

1,20,000

90,000

30,000

1,50,000

30,000

50,000

30,000

1,50,000

90,000

60,000

1,50,000

60,000

2,000

NIL

6,000

6,000

 

 

 

 

 

 

 (Bank)

 

 

92,000

60,000

2,76,000

1,80,000

 

3,00,000

90,000

 

 

Mohan

Money Received on Application 800×3

=

2,400

Application money adjusted to Share Capital 600×3

=

1,800

Execs Money on Application

=

600

 

 

 

Allotment due on 600 shares × Rs 5

=

3,000

Less: Adjustment of excess money on application

=

600

Calls-in-Arrears by Mohan

 

2,400

Sohan

Money received on Application 1,000×3

=

3,000

Application money adjusted to Share Capital 600×3

=

1,800

Excess money on application

=

1,200

 

 

 

Allotment due on 600 Shares × Rs 5

=

3,000

Less: Adjustment of excess money on application

=

1,200

Calls-in-Arrears by Sohan

=

1,800

 

 

 

Allotment due on 60,000 shares × Rs 5

=

3,00,000

Less: Excess Application money adjusted on Allotment

=

90,000

 

 

2,10,000

Less: Calls-in-Arrears by Mohan

=

2,400

Less: Calls-in-Arrears by Sohan

=

1,800

Money received on allotment

=

2,05,800

Page No 8.119:

Question 20:

Sony Media Ltd.issued 50,000 shares  of ₹ 10 each payable  ₹ 3 on application , ₹ 4 on allotment and balance on first and final call . Applications were received for 1,00,000 shares and allotment was made as follows :
(i) Applicants for 60,000 shares were allotted 30,000 shares,
(ii) Applicants for 40,000 shares were allotted 20,000 shares,
Anupam to whom 1,000 shares were allotted from category
(i) failed to pay the allotment money.
Pass journal entries up to allotment .

Answer:

Journal
Date Particulars L.F. Debit Amount (₹) Credit Amount (₹)
  Bank A/c (1,00,000 × 3) Dr.   3,00,000  
    To Share Application A/c       3,00,000
  (Received application money on 1,00,000 shares)        
           
  Share Application A/c Dr.   3,00,000  
    To Share Capital A/c (50,000 × 3)       1,50,000
    To Share Allotment A/c       1,50,000
  (Transfer of application money to Share Capital)        
           
  Share Allotment A/c (50,000 × 4) Dr.   2,00,000  
    To Share Capital A/c       2,00,000
  Allotment due on 50,000 shares)        
           
  Bank A/c (W.N. 1) Dr.   49,000  
    To Share Allotment A/c       49,000
  (Allotment money received after adjustment of excess on application and arrears)        
         

Working Notes:

1) Computation of amount received on allotment:
 
Allotment due (50,000 × 4) = Rs. 2,00,000
  Less: Amount received on application in excess (on 50,000 shares @ Rs . 3 each) = Rs. 1,50,000
    Rs. 50,000
  Less: Amount due but not received on shares of Anupam   1,000
    Rs. 49,000

2)  Calculation of Amount not Received on the shares of Anupam

Shares allotted to Anupam=1,000Shares applied by Anuoam=1,000×60,00030,000=2,000

Amount due on allotment of Anupam's Share (4 × 1,000) = 4,000
  Less: Excess received on application (3 × 2,000 – 3 × 1,000) = 3,000
    1,000

Page No 8.119:

Question 21:

The Kalyan Cotton Mills Ltd.was registered on 1st January,2011 with a capital of ₹10,00,000 divided into 1,00,000 shares of ₹ 10 each . The company issued 42,000 shares of which 40,000 shares were taken up by the public and ₹ 1 per share was received with application. On 1st February , these shares were allotted and ₹ 2 per share was duly received on 28th February as allotment money. A first call of ₹ 3 per share was made on 1st March and the call money on all shares with the exception of 100 shares was received . The final call of ₹ 4 per share was made on 1st June and the amount due, with the exception of 400 shares , was received by 30th June. Pass necessary journal ands Cash Book entries and prepare the Balance Sheet as at 30th June, 2011.

Answer:

Authorised Capital 1,00,000 shares of Rs 10 each

Issued Capital 42,000 shares of Rs 10 each

Applied 40,000 shares

Payable as:

Rs 1 on application

Rs 2 on allotment

Rs 3 on first call

Rs 4 on final call

Books of Kalyan Cotton Mills Ltd.

Cash Book

Dr.

 

Cr.

Date

Particulars

L.F.

Bank

Rs

Date

Particulars

L.F.

Bank

Rs

2011

 

 

 

2011

 

 

 

Feb 01

Share Application

 

40,000

 

 

 

 

Feb 28

Share Allotment

 

80,000

 

 

 

 

May 01

Share First Call

 

1,19,700

 

 

 

 

June 30

Share Final Call

 

1,58,400

 

Balance c/d

 

3,98,100

 

 

 

3,98,100

 

 

 

3,98,100

 

 

 

 

 

 

 

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

 Amount

 Rs

2011

 

 

 

 

 

Feb 01

Share Application A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(Share application of 40,000 shares at Re 1 each transferred to Share Capital Account)

 

 

 

 

 

 

 

 

Feb 01

Share Allotment A/c

Dr.

 

80,000

 

 

To Share Capital A/c

 

 

80,000

 

(Share allotment due on 40,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

Mar 01

Share First Call A/c

Dr.

 

1,20,000

 

 

To Share Capital A/c

 

 

1,20,000

 

(Share first call due on 40,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

May 30

Calls-in-Arrears A/c

Dr.

 

300

 

 

To Share First Call A/c

 

 

300

 

(Share first call outstanding on 100 shares at Rs 3 each)

 

 

 

 

 

 

 

 

June 01

Share Final Call A/c

Dr.

 

1,60,000

 

 

To Share Capital A/c

 

 

1,60,000

 

(Share final call due on 40,000 shares of Rs 4 each)

 

 

 

 

 

 

 

 

June 30

Calls-in-Arrears A/c

Dr.

 

1,600

 

 

To Share Final Call A/c

 

 

1,600

 

(Share final call outstanding on 400 shares at Rs 4 each)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Kalyan Cotton Mills Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

3,98,100

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

3,98,100

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

3,98,100

Total

 

3,98,100

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

1,00,000 shares of Rs 10 each

10,00,000

 

Issued Share Capital

 

 

 42,000 shares of Rs 10 each

4,20,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 40,000 shares of Rs 10 each

4,00,000

 

 

Less: Calls-in-Arrears

  (1,900)

3,98,100

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

3,98,100

 

 

 

Page No 8.119:

Question 22:

Ghosh Ltd. made the second and final call on its 50,000 Equity Shares @ ₹ 2 per share on 1st January, 2016. The entire amount was received on 15th January, 2016 except on 100 shares allotted to Venkat. Pass necessary journal entries for the call money due and received by opening Calls-in-Arrears Account.

Answer:

Books of Ghosh Limited

Journal

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit

 Amount

 Rs

2016

 

 

 

 

Jan. 01

Share Second and Final Call A/c

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c

 

 

1,00,000

 

(Share second and final call due on 50,000 shares at Rs 2 per share)

 

 

 

 

 

 

 

 

Jan. 15

Bank A/c

Dr.

 

99,800

 

 

Calls-in-Arrears A/c

Dr.

 

200

 

 

To Share Second and Final Call A/c

 

 

1,00,000

 

(Share second and final call received from 49,900 shares and 100 shares failed to pay the it)

 

 

 

 

 

 

 

 

 



Page No 8.120:

Question 23:

A Ltd was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20,000 such shares at a premium of ₹ 2 per share , payable as ₹ 2 per share on application, ₹ 5 per share on allotment (including premium) and ₹ 2 per share on first call made three months later. All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares and another shareholder holding 1,000 shares failed to pay the first call money.
Pass journal entries to record the above transactions and show how they will appear in the company's Balance Sheet.

Answer:

Amount Payable on:

Application

Rs

2

 

Allotment

Rs

5

(3+2)

First Call

Rs

2

 

Called-up

Rs

9

(7+2)

 

Books of A Ltd.

Journal

 

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit

 Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

40,000

 

 

To Share Application A/c

 

 

40,000

 

(Share application money received for 20,000 shares at Rs 2 per share)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(Share application of 20,000 shares at Rs 2 per share transferred to Share Capital Account)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

1,00,000

 

 

To Share Capital A/c

 

 

60,000

 

To Securities Premium A/c

 

 

40,000

 

(Share allotment due on 20,000 shares at Rs 5 per share including Rs 2 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,00,000

 

 

To Share Allotment A/c

 

 

1,00,000

 

(Share allotment received on 20,000 shares at Rs 5 per share)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(Share first call due on 20,000 shares at Rs 2 per shares)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

38,900

 

 

Calls-in-Arrears A/c

Dr.

 

2,000

 

 

To Share First Call A/c

 

 

40,000

 

To Calls-in-Advance A/c

 

 

900

 

(Share first call received on 39,000 shares at Rs 2 each, 300 shares paid calls-in-advance at Rs 3 per share and 1,000 shares failed to pay to first call money)

 

 

 

 

 

 

 

 

             

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

A Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,38,000

b. Reserves and Surplus

2

40,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

a. Other Current Liabilities

3

900

Total

 

1,78,900

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

4

1,78,900

Total

 

1,78,900

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

50,000 shares of Rs 10 each

5,00,000

 

Issued Share Capital

 

 

 20,000 shares of Rs 10 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

20,000 shares of Rs 10 each, Rs 7 Called-up and Paid-up

1,40,000

 

 

   Less: Calls-in-Arrears

(2,000)

1,38,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

40,000

   

 

3

Other Current Liabilities

 

 

Calls-in-Advance

900

   

 

4

Cash and Cash Equivalents

 

 

Cash at Bank

1,78,900

 

 

 

 

Page No 8.120:

Question 24:

XYZ Ltd.issued 8,000 Equity Shares of ₹ 10 each. ₹ 5 per share was called, payable ₹ 2 on application , ₹ 1 on allotment , ₹ 1 on first call and ₹ 1 on second call. All the money was duly received with the following exceptions:
   A who holds 250 shares paid nothing after application.
   B who holds 500 shares paid nothing after allotment.
   C who holds 1,250 shares paid nothing after first call.
Prepare journal and the Balance Sheet .
 

Answer:

Issued Capital 5,000 Shares of Rs 10 each Rs 5 called up

Books of XYZ Ltd.

Journal

Date

Particulars

L.F.

Debit Amount

 Rs

Credit Amount

 Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

16,000

 

 

To Share Application A/c

 

 

16,000

 

(Share application money received for 8,000 shares at Rs2 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

16,000

 

 

To Share Capital A/c

 

 

16,000

 

(Application money transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

8,000

 

(Allotment due on 8,000 shares at Re 1 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

7,750

 

 

Call-in-Arrears A/c

Dr.

 

250

 

 

To Share Allotment A/c

 

 

8,000

 

(Allotment money received on 7,750 shares and 250 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

8,000

 

(First call due on 8,000 shares at Re 1 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

7,250

 

 

Calls in Arrears A/c

Dr.

 

750

 

 

To Share First Call A/c

 

 

8,000

 

(Share first call money received on 7,250 shares and 750 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Share Second Call A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

8,000

 

(Share second call due on 8,000 shares at Rs l each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,000

 

 

Call-in-Arrears A/c

Dr.

 

2,000

 

 

To Share Second Call A/c

 

 

8,000

 

(Share second call money received on 6,000 shares and 2000 shares failed to pay it)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

XYZ Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

37,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

37,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

37,000

Total

 

37,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

……. shares of Rs 10 each

-

 

Issued Share Capital

 

 

 8,000 shares of Rs 10 each

80,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 8,000 shares of Rs 10 each, Rs 5 Called-up and Paid-up

40,000

 

 

 Less: Calls-in-Arrears

(3,000)

37,000

   

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

37,000

 

 

 

Page No 8.120:

Question 25:

Bharat Ltd made the first call of ₹ 2 per share on its 1,00,000 Equity Shares on 1st March , 2006. Ashok, a shareholder, holding 800 shares paid the second and final call amount along with the first call money. The second and final call amount was ₹ 3 per share. Pass necessary journal entries for recording  the above using the Calls-in Advance Account.

Answer:

Books of Bharat Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2006

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

2,00,000

 

 

To Equity Share Capital A/c

 

 

2,00,000

 

(Shares first call due on 1,00,000 shares at Rs 2 per share)

 

 

 

 

 

 

 

 

Mar 01

Bank A/c

Dr.

 

2,02,400

 

 

To Equity Share First Call A/c

 

 

2,00,000

 

To Call-In-Advance A/c

 

 

2,400

 

(Share first call received with call-in-advance of 800 shares at Rs 3 per share)

 

 

 

 

 

 

 

 

Page No 8.120:

Question 26:

2,000 Equity Shares of ₹ 10 each  were issued to  Limited  from whom assets of ₹ 25,000 were acquired .
Pass Journal entry.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

 Amount

Rs

 

 

 

 

 

 

Assets A/c

Dr.

 

25,000

 

 

To X Ltd.

 

 

25,000

 

(Assets bought from X Ltd.)

 

 

 

 

 

 

 

 

 

X Ltd.

Dr.

 

25,000

 

 

To Share Capital A/c

 

 

20,000

    To Securities Premium A/c     5,000

 

(2,000 shares of Rs 10 each issued to X Ltd.)

 

 

 

 

 

 

 

 

Page No 8.120:

Question 27:

A limited company issued 800 Equity Shares of ₹ 100 each at a premium of 25% as fully paid-up in consideration of the purchase of plant and machinery of ₹ 1,00,000.
Pass entries in company's journal

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Plant & Machinery A/c

Dr.

 

1,00,000

 

 

To Vendor A/c

 

 

 

1,00,000

 

(Machinery purchased)

 

 

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c (800 × 100)

 

 

 

80,000

 

To Securities Premium A/c (800 × 25)

 

 

 

20,000

 

(Shares issued to vendor at a premium of Rs 25 per share)

 

 

 

 

 

 

 

 

 

Page No 8.120:

Question 28:

Rajan Ltd . purchased assets from Geeta & Co . for ₹ 5,00,000. A sum of ₹ 1,00,000 was paid by means of a bank draft and for the balance due Rajan Ltd. issued equity Shares of ₹ 10 each at a premium of 25%. journalise the above transactions in the books of the company.

Answer:

Books of Rajan Limited

Journal

Date

Particulars

L.F.

Debit

 Amount

Rs

Credit

 Amount

Rs

 

 

 

 

 

 

Assets A/c

Dr.

 

5,00,000

 

 

To Geeta & Co.

 

 

5,00,000

 

(Assets purchased from Geeta & Co.)

 

 

 

 

 

 

 

 

 

Geeta & Co.

Dr.

 

1,00,000

 

 

To Bank A/c

 

 

1,00,000

 

(Payment made to Geeta & Co.)

 

 

 

 

 

 

 

 

 

Geeta & Co.

Dr.

 

4,00,000

 

 

To Equity Share Capital A/c

 

 

3,20,000

 

To Securities Premium A/c

 

 

80,000

 

(32,000 equity shares of Rs 10 issued at 25% premium)

 

 

 

 

 

 

 

 

Working Note-

Page No 8.120:

Question 29:

Z Ltd . purchased furniture costing ₹ 2,20,000 from C.D Ltd. The payment was to be made by issue of 9% Preference Shares of ₹ 100 each  ata  premium of ₹ 10 per share . Pass necessary Journal entries in the books of Z Ltd.

Answer:

Books of Z Ltd.

Journal

Date

Particulars

L.F.

Debit Amount

 Rs

Credit Amount

 Rs

 

 

 

 

 

 

Assets A/c

Dr.

 

2,20,000

 

 

To C.D Ltd.

 

 

2,20,000

 

(Assets purchased from C.D Ltd.)

 

 

 

 

 

 

 

 

 

C.D Ltd.

Dr.

 

2,20,000

 

 

To 9% Preference Share Capital

 

 

2,00,000

 

To Securities Premium A/c

 

 

20,000

 

(2,000 9% Preference Shares of Rs 100 each issued at 10% premium to C.D Ltd.)

 

 

 

 

 

 

 

 

Working Note:

Page No 8.120:

Question 30:

Goodluck Ltd purchased  machinery costing ₹ 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity Shares of ₹ 10 each at a premium of 25%.
Pass necessary Journal entries for the above transactions in the books of Goodluck Ltd. 

Answer:

Books Goodluck Ltd.

Journal

Date

Particulars

L.F.

Debit

 Amount

 Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Machinery A/c

Dr.

 

10,00,000

 

 

To Fail Deals Ltd.

 

 

10,00,000

 

(Machinery purchased from Fair Deals Ltd.)

 

 

 

 

 

 

 

 

 

Fair Deals Ltd.

Dr.

 

10,00,000

 

 

To Equity Share Capital A/c

 

 

8,00,000

 

To Securities Premium A/c

 

 

2,00,000

 

(80,000 equity shares of Rs 10 each issued at 25% premium)

 

 

 

 

 

 

 

 

Working Note:

Page No 8.120:

Question 31:

Jain Ltd  purchased machinery costing ₹ 10,00,000 from Ayer Ltd. 50% of the payment was made by cheque and for the remaining 50% , the company issued Equity Shares of ₹ 100 each at a premium of 25% . Pass necessary Journal entries  in the books of Jain Ltd . for the above transaction.

Answer:

Books of Jain Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Machinery A/c

Dr.

 

10,00,000

 

 

To Ayer Ltd.

 

 

10,00,000

 

(Machinery purchased from Ayer Ltd.)

 

 

 

 

 

 

 

 

 

Ayer Ltd.

Dr.

 

5,00,000

 

 

To Bank A/c

 

 

5,00,000

 

(Payment made to Ayer Ltd.)

 

 

 

 

 

 

 

 

 

Ayer Ltd.

Dr.

 

5,00,000

 

 

To Equity Share Capital A/c

 

 

4,00,000

 

To Securities Premium A/c

 

 

1,00,000

 

(4,000 equity shares of Rs 100 each issued at 25% premium)

 

 

 

 

 

 

 

 

Working Note-

Page No 8.120:

Question 32:

Sona Ltd.  purchased machinery costing ₹ 17,00,000 from Mona Ltd. Sona Ltd. paid 20% of the amount by cheque and for the balance amount issued Equity Shares of ₹ 100 each at a premium of 25% . Pass necessary Journal entries for the above transactions in the books of Sona Ltd .Show your working notes clearly.

Answer:

Journal
In the Books of Sona Ltd.

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

 

 

 

 

 

 

Machinery A/c

Dr.

 

17,00,000

 

 

To Mona Ltd.

 

 

 

17,00,000

 

(Machinery purchased on credit from Sona Ltd.)

 

 

 

 

 

 

 

 

 

 

 

Mona Ltd.

Dr.

 

3,40,000

 

 

To Bank A/c

 

 

 

3,40,000

 

(20% amount paid through cheque)

 

 

 

 

 

 

 

 

 

 

 

Mona Ltd. (17,00,000 – 3,40,000)

Dr.

 

13,60,000

 

 

To Equity Share Capital*

 

 

 

10,88,000

 

To Securities Premium A/c*

 

 

 

2,72,000

 

(Issued 10,880 shares of Rs 100 each to Mona Ltd. at 25% Premium)

 

 

 

 

 

 

 

 

 

 

Working Notes: *

Page No 8.120:

Question 33:

Light Lamps Ltd. issued 50,000 shares of ₹ 10 each as fully paid-up to the promoters for their services to set-up the company . It also issued 2,000 shares of ₹ 10 each  credited as fully paid-up to the underwriters of shares for their services . journalise these transactions.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

 

 

 

 

 

 

Incorporation Expenses A/c

Dr.

 

5,00,000

 

 

   To Share Capital A/c (50,000×10)

 

 

 

     5,00,000

 

(Shares issued to promoters)

 

 

 

 

 

 

 

 

 

 

 

Underwriting Commission A/c

Dr.

 

20,000

 

 

   To Underwriters’ A/c

 

 

 

20,000

 

(Underwriting commission due)

 

 

 

 

 

 

 

 

 

 

 

Underwriters’ A/c

Dr.

 

        20,000

 

 

  To Share Capital A/c (2,000×10)

 

 

 

20,000

 

(Shares issued to underwriters)

 

 

 

 

 

 

 

 

 



Page No 8.121:

Question 34:

Better Prospect Ltd. acquired land costing  ₹ 1,00,000 and in payment allotted 1,000 Equity Shares of  ₹ 100 each as fully paid. Further, the company issued 4,000 Equity Shares to public . The shares were payable as:  ₹ 30 on application ;  ₹ 30 on allotment;  ₹ 40 on first and final call.
Applications were received for all shares which were allotted . All the money was received except the call on 200 shares.
Pass journal entries and prepare Balance Sheet of the company. 

Answer:

Issued to public payable as:

Rs

30

on application

Rs

30

on allotment

Rs

40

first and final call

Rs

100

Called-up

 

Books of Better Prospect Ltd.

Journal

Date

Particulars

L.F.

Debit Amount

 Rs

Credit Amount

 Rs

 

 

 

 

 

 

Land A/c

Dr.

 

1,00,000

 

 

To Vendor

 

 

1,00,000

 

(Land purchased from the vendor)

 

 

 

 

 

 

 

 

 

Vendor

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c

 

 

1,00,000

 

(1,000 equity of Rs 100 each issued to Vendor)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,20,000

 

 

To Equity Share Application A/c

 

 

1,20,000

 

(Share Application money received for 4,000 equity shares at Rs 30 per share)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

 

1,20,000

 

 

To Equity Share Capital

Dr.

 

 

1,20,000

 

(Share Application money of 4,000 shares transferred to Equity Share Capital Account)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

1,20,000

 

 

To Equity Share Capital A/c

 

 

1,20,000

 

(Share allotment due on 4,000 equity shares of Rs 30 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,20,000

 

 

To Share Allotment A/c

 

 

1,20,000

 

(Share allotment received for 4,000 shares at Rs 30 per share)

 

 

 

 

 

 

 

 

 

Share First and Final Call A/c

Dr.

 

1,60,000

 

 

To Equity Share Capital A/c

 

 

1,60,000

 

(First and final call due on 4,000 equity shares at 40 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,52,000

 

 

Calls-in-Arrears A/c

Dr.

 

8,000

 

 

To Share First and Final Call A/c

 

 

1,60,000

 

(First and final call received from 3,800 shares and 200 share failed to pay it)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Better Prospect Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

4,92,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

4,92,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

a. Fixed Assets

 

 

i. Tangible Assets

2

1,00,000

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

3,92,000

Total

 

4,92,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

…… shares of Rs 100 each

-

 

Issued Share Capital

 

 

 5,000 shares of Rs 100 each

5,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,000 shares of Rs 100 each (for consideration other than cash)

1,00,000

 

 

 4,000 shares of Rs 100 each

4,00,000

 

 

  Less: Calls-in-Arrears

  (8,000)

4,92,000

 

 

 

2

Tangible Assets

 

 

Land

1,00,000

   

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

3,92,000

 

 

 

 

Page No 8.121:

Question 35:

A company issued 30,000 fully paid-up shares of  ₹ 100 each for purchase of the following assets and liabilities from Sharma Co:

  Plant   ₹ 7,00,000  Stock-in-Trade  ₹ 9,00,000
  Land and Building   ₹ 12,00,000  Sundry Creditors   ₹ 2,00,000

You are required to pass necessary journal entries.

Answer:

Journal Entries

Date

Particulars

L.F.

Debit

 Amount

Rs

Credit

 Amount

Rs

 

 

 

 

 

 

Goodwill A/c

Dr.

 

4,00,000

 

 

Plant A/c

Dr.

 

7,00,000

 

 

Stock-in-Trade A/c

Dr.

 

9,00,000

 

 

Land and Building

Dr.

 

12,00,000

 

 

To Sundry Creditors A/c

 

 

2,00,000

 

To Sharma & Co

 

 

30,00,000

 

(Asset purchased and liabilities accepted from Sharma & Co)

 

 

 

 

 

 

 

 

 

Sharma & Co

Dr.

 

30,00,000

 

 

To Share Capital A/c

 

 

30,00,000

 

(30,000 shares of Rs 100 each issued to Sharma & Co.)

 

 

 

 

 

 

 

 

Page No 8.121:

Question 36:

A company purchased a running business from M/s. Rai Brothers for a sum of  ₹ 15,00,000  payable ₹ 12,00,000 in fully paid shares of ₹ 10 each  and balance through cheque.
The  assets and liabilities consisted of the following:

  Plant   ₹ 4,00,000   Stock   ₹ 4,00,000
  Building   ₹ 4,00,000   Cash   ₹ 3,00,000
  Sundry Debtors   ₹ 3,00,000   Sundry Creditors   ₹ 2,00,000

You are required to pass necessary journal entries in the company's books.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Plant and Machinery

Dr.

 

4,00,000

 

 

Building A/c

Dr.

 

4,00,000

 

 

Sundry Debtors A/c

Dr.

 

3,00,000

 

 

Stock A/c

Dr.

 

4,00,000

 

 

Cash A/c

Dr.

 

3,00,000

 

 

To Sundry Creditors A/c

 

 

2,00,000

 

To M/s Rai Brothers

 

 

15,00,000

 

To Capital Reserve A/c

 

 

1,00,000

 

(Business of M/s Rai Brothers took over)

 

 

 

 

 

 

 

 

 

M/s Rai Brothers

Dr.

 

12,00,000

 

 

To Share Capital A/c

 

 

12,00,000

 

(Shares issued to M/s Rai Brothers)

 

 

 

 

 

 

 

 

 

M/S Rai Brothers

Dr.

 

3,00,000

 

 

To Bank A/c

 

 

3,00,000

 

(Payment made to M/s Rai Brothers through cheque)

 

 

 

 

 

 

 

 

 

Page No 8.121:

Question 37:

Sandesh Ltd. took over the assets of ₹ 7,00,000 and liabilities of   ₹ 2,00,000 from Sanchar Ltd. for a purchase consideration of  ₹ 4,59,500.  ₹ 8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of  ₹ 10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.

Answer:

Sandesh Ltd.

Journal 

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

 

 

 

 

(i)

Sundry Assets A/c

Dr.

 

7,00,000

 

 

  To Sundry Liabilities A/c

 

 

 

2,00,000

 

  To Sanchar Ltd.

 

 

 

4,59,500

 

  To Capital Reserve A/c

 

 

 

40,500

 

(Purchase of assets and liabilities of Sanchar Ltd.)

 

 

 

 

 

 

 

 

 

 

(ii)

Sanchar Ltd.

Dr.

 

4,59,500

 

 

  To Equity Share Capital A/c

 

 

 

4,10,000

 

  To Securities Premium A/c

 

 

 

41,000

 

  To Bank A/c

 

 

 

8,500

 

(41,000 Equity Shares issued of Rs 10 each at a premium of Re 1 per share and Rs 8,500 by bank draft)

 

 

 

 

 

 

 

 

 

 

Working Notes:
WN1: Calculation of Number of Equity Shares

Page No 8.121:

Question 38:

Z Ltd. issued 20,000 Equity Shares of  ₹ 10 each at par payable: On application  ₹ 2 per share; on allotment  ₹ 3 per share; on first call  ₹ 3 per share; on second and final call  ₹ 2 per share .
Mr Gupta was allotted 100 shares . Pass necessary  journal entry relating to the forfeiture of shares in each of the following alternative cases:
Case I     If Mr Gupta failed to pay the allotment money and his shares were forfeited.
Case II   If Mr Gupta failed to pay allotment money and on his subsequent failure to pay  the first call , his  shares were forfeited.
Case III If Mr Gupta failed to pay the first call and on his subsequent failure to pay the second and final call, his shares were forfeited.

Answer:

Application

Rs

2

Allotment

Rs

3

First Call

Rs

3

Final Call

Rs

2

 

 

10

 

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

Case I

Share Capital A/c (100×5)

Dr.

 

500

 

 

To Share Forfeiture A/c

 

 

200

 

To Share Allotment A/c

 

 

300

 

(100 shares of Rs 10 each, Rs 5 called-up, forfeited for the non-payment of allotment)

 

 

 

 

 

 

 

 

Case II

Share Capital A/c (100 × 8)

Dr.

 

800

 

 

To Share Forfeiture A/c

 

 

200

 

To Share Allotment A/c

 

 

300

    To Share First Call A/c     300

 

(100 shares of Rs 10 each, Rs 8 called-up forfeited for non-payment allotment and first-call)

 

 

 

 

 

 

 

 

Case III

Share Capital A/c

Dr.

 

1,000

 

 

To Share Forfeiture A/c

 

 

500

 

To Share First Call A/c

 

 

300

    To Share Final Call A/c     200

 

(100 shares of Rs 10 each forfeited for the non-payment Rs 5 each)

 

 

 

 

 

 

 

 

 

Page No 8.121:

Question 39:

A Co Ltd. was registered with a nominal capital of  ₹ 1,00,000 in Equity Shares of  ₹ 10 each. It offered to the public 6,000 shares for subscription . The applications were received for 8,000 shares. The Directors rejected applications for 1,000 shares and returned the money received thereon. The application money received on the other 1,000 shares  was adjusted towards allotment money. The amount payable on shares was:  ₹ 2 per share on application,  ₹ 4 per share on allotment and the balance on first call . One shareholders holding 100 shares failed to pay the first call money and as a result his shares were forfeited .
Pass necessary journal entries and prepare Cash Book to record  the above transactions.

Answer:

Authorised Capital 10,000 equity shares of Rs 10 each

Issued Capital 6,000 shares

Applied Capital 8,000 shares

Allotment made as:

 

Payable as:

 

 

 

Applied

 

Alloted

 

Application

Rs

2

per share

7,000

 

6,000

 

Allotment

Rs

4

per share

1,000

 

NIL

 

First and Final Call

Rs

4

per share

8,000

 

6,000

 

 

 

10

per share

 

 

Cash Book

 

Dr.

 

Cr.

Date

Particulars

 

Bank Rs

Date

Particulars

Bank

Rs

 

 

 

 

 

 

 

Equity Share Application

16,000

 

Equity Share Application

2,000

 

Equity Share Allotment

22,000

 

 

 

 

Equity Share First and Final Call

23,600

 

Balance c/d

59,600

 

 

61,600

 

 

61,600

 

 

 

 

 

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

14,000

 

 

To Equity Share Capital A/c

 

 

12,000

 

To Equity Share Allotment A/c

 

 

2,000

 

(Share application money of 6,000 shares at Rs 2 each transferred to Share Capital and Rs 2,000 adjusted towards allotment)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

24,000

 

 

To Equity Share Capital A/c

 

 

24,000

 

(Share allotment money due on 6,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

24,000

 

 

To Equity Share Capital A/c

 

 

24,000

 

(Share First and Final Call due on 6,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Calls-in-Arrears A/c

Dr.

 

400

 

 

To Equity First and Final Call A/c

 

 

400

 

(A holder of 100 shares failed to pay First and Final Call money and amount due from him transferred to Calls-in-Arrears Account)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

1,000

 

 

  To Share Forfeiture A/c

 

 

600

 

  To Calls-in-Arrears A/c

 

 

400

 

(100 shares of Rs 10 each forfeited for the non-payment of first and final call Rs 4 per share)

 

 

 

 

 

 

 

 

 



Page No 8.122:

Question 40:

U.P. Sugar Works Ltd . was registered on 1st January, 2014 with an authorised capital of ₹ 15,00,000 divided into 15,000 shares of ₹ 100 each. The company issued on 1st April, 2014, 5,000 shares of ₹ 100 each at a premium of ₹ 5 per share payable ₹ 25 per share on application , ₹ 30(including premium) on  allotment and the balance in two equal installments of ₹ 25 each on 1st July ad 1st October respectively .All the allotments and call moneys were paid when due , except in case of one shareholder who failed to pay the final call on 100 shares held by him . His shares were forfeited on 1st November after giving him a due notice . Show necessary entries in the books of the company to record these transactions.

Answer:

Authorised capital 15,000 shares of 100 each

Issued and applied capital 5,000 shares of Rs 100 each at a premium Rs 5

Application

=

Rs 25

 

Allotment

=

Rs 30

(25+5)

First Call

=

Rs 25

 

Final Call

=

Rs 25

 

 

 

105

(100+5)

 

 

Books of U.P. Sugar Works Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2014

 

 

 

 

 

Bank A/c

Dr.

 

1,25,000

 

 

To Share Application A/c

 

 

1,25,000

 

(Share application money received for 5,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 

Apr. 01

Share Application A/c

Dr.

 

1,25,000

 

 

To Share Capital A/c

 

 

1,25,000

 

(Share application money transferred to Share Capital)

 

 

 

 

 

 

 

 

Apr. 01

Share Allotment A/c

Dr.

 

1,50,000

 

 

To Share Capital A/c

 

 

1,25,000

 

To Securities Premium A/c

 

 

25,000

 

(Share allotment due on 5,000 shares at Rs 30 each including Rs 5 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,50,000

 

 

To Share Allotment

 

 

1,50,000

 

(Share allotment money received)

 

 

 

 

 

 

 

 

 

 

 

 

 

Jul. 01

Share First Call A/c

Dr.

 

1,25,000

 

 

To Share Capital A/c

 

 

1,25,000

 

(Share first call due on 5,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,25,000

 

 

To Share First Call A/c

 

 

1,25,000

 

(Share first call money received)

 

 

 

 

 

 

 

 

Oct 01

Share Final Call A/c

Dr.

 

1,25,000

 

 

To Share Capital A/c

 

 

1,25,000

 

(Share final call due on 5,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,22,500

 

 

Calls-in-Arrears A/c

Dr.

 

2,500

 

 

To Share Final Call A/c

 

 

1,25,000

 

(Share final call Rs 25 each received for 4,900 shares and a holder of 100 share failed to pay it)

 

 

 

 

 

 

 

 

Nov. 01

Share Capital A/c (100×100)

Dr.

 

10,000

 

 

To Share Forfeiture A/c (100×75)

 

 

7,500

 

To Calls-in-Arrears A/c (100×25)

 

 

2,500

 

(100 shares forfeited for the non-payment of final call)

 

 

 

 

 

 

 

 

 

Page No 8.122:

Question 41:

A company issued 10,000 Equity  Shares of ₹ 10 each at a premium of ₹ 3 per share payable ₹ 5 on application, ₹ 5 (including premium) on allotment and the balance on first call . All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received.
Pass necessary journal entries to record the above.

Answer:

Issued and Applied 10,000 Shares at Rs 10 each at a premium of Rs 3 per share

Application

Rs

5

 

Allotment

Rs

5

(2+3)

First and Final Call

Rs

3

 

 

Rs

13

(10+3) Called-up

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

50,000

 

 

To Equity Share Application A/c

 

 

50,000

 

(Share application money received for 10,000 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

50,000

 

 

To Equity Share capital A/c

 

 

50,000

 

(Share application money transferred to Share Capital Account)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

50,000

 

 

To Equity Share Capital A/c

 

 

20,000

 

To Securities Premium

 

 

30,000

 

(Share allotment due on 10,000 shares at Rs 5 per share including premium Rs 3)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

49,000

 

 

Calls-in-Arrears A/c

Dr.

 

1,000

 

 

To Equity Share Allotment A/c

 

 

50,000

 

(All allotment money received except 200 shares)

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

30,000

 

 

To Equity Share Capital A/c

 

 

30,000

 

(First and final due on 10,000 shares at Rs 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

29,100

 

 

Calls-in-Arrears A/c

Dr.

 

900

 

 

To Equity Share First and Final Calls A/c

 

 

30,000

 

(First and final call received on all shares except 300 shares)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

2,000

 

 

Securities Premium A/c

Dr.

 

600

 

 

To Share Forfeiture A/c

 

 

1,000

 

To Calls-in-Arrears A/c

 

 

1,600

 

(200 shares forfeited for the non-payment of Rs 8 per share including Rs 3 premium)

 

 

 

 

 

 

 

 

Page No 8.122:

Question 42:

A  company issued 10,000 shares of the value of  ₹ 10 each , payable  ₹ 3 on application, ₹ 3 on allotment and ₹ 4 on the first and final call . All amounts are duly received except the call money on 100 shares . These shares are subsequently forfeited by Directors and are resold as fully paid-up for ₹ 500 .
Give necessary journal entries for the transactions.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

30,000

 

 

To Share Application A/c

 

 

30,000

 

(Share application money received for 10,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

30,000

 

 

To Share Capital A/c

 

 

30,000

 

(Share application money transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

30,000

 

 

To Share Capital A/c

 

 

30,000

 

(Allotment due on 10,000 shares at Rs 3 per shares)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

30,000

 

 

To Share Allotment A/c

 

 

30,000

 

(Share allotment money received)

 

 

 

 

 

 

 

 

 

Share First and Final Call A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(First and final call due on 10,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

39,600

 

 

Calls-in-Arrears A/c

Dr.

 

400

 

 

To Share First and Final Call

 

 

40,000

 

(First and final call of Rs 4 per share received on 9,900 shares, and 100 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Share Capital A/c

Dr.

 

1,000

 

 

To Share Forfeiture A/c

 

 

600

 

To Calls-in-Arrears A/c

 

 

400

 

(100 shares of Rs 10 each forfeited for the non-payment of first and final call Rs 4 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

500

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Share Capital A/c

 

 

1,000

 

(100 shares of Rs 10 each re-issued for the sum of Rs 500)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

100

 

 

To Capital Reserve A/c

 

 

100

 

(Balance in Share Forfeiture Account after re-issue of shares, transferred to Capital Reserve Account)

 

 

 

 

 

 

 

 

Working Note

Page No 8.122:

Question 43:

X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made . The forfeited shares were reissued for ₹ 90 per share , ₹ 75 paid-up. Journalise the above.

Answer:

Application

25

Balancing Figure

Allotment

30

 

First Call

20

 

Final Call

25

Un-called

 

100

 

Called-up Rs 75 per share

Books of X Limited

Journal

Date

Particulars

L.F.

Debit Amount

 Rs

Credit Amount

 Rs

 

 

 

 

 

 

Equity Share Capital A/c (900×75)

Dr.

 

67,500

 

 

To Share Forfeiture A/c

 

 

22,500

 

To Calls-in-Arrears A/c

 

 

45,000

 

(900 shares of Rs 100 each Rs 75 called-up, forfeited for the non-payment sum of allotment Rs 30 and first call Rs 20 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

81,000

 

 

To Share Capital A/c

 

 

67,500

 

To Securities Premium A/c

 

 

13,500

 

(900 shares of Rs 100 each re-issued as Rs 75 paid-up for Rs 90 each)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

22,500

 

 

To Capital Reserve A/c

 

 

22,500

 

(Balance of Share Forfeiture Account after re-issue, transferred to Capital Reserve Account)

 

 

 

 

 

 

 

 

Working Notes-

Page No 8.122:

Question 44:

The Directors of M Ltd  resolved on 1st May, 2015 that 2,000 Equity Shares of ₹ 10 each , ₹ 7.50 paid be  forfeited for non-payment of final call of ₹ 2.50 . On 10th June, 2015, 1,800 of these shares were reissued for ₹ 6 per share . Give necessary Journal entries .

Answer:

Books of M Limited

Journal

Date

Particulars

L.F.

Debit

Amount

 Rs

Credit Amount

 Rs

2012

 

 

 

 

May 01

Equity Share Capital A/c

Dr.

 

20,000

 

 

To Share Forfeiture A/c

 

 

15,000

 

To Call-in-Arrears A/c

 

 

5,000

 

(2,000 shares of Rs 10 each forfeited for non-payment of final call Rs 2.5 per share)

 

 

 

 

 

 

 

 

June 10

Bank A/c

Dr.

 

10,800

 

 

Share Forfeiture A/c

Dr.

 

7,200

 

 

To Share Capital A/c

 

 

18,000

 

(1,800 shares of Rs 10 each re-issued at Rs 6 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

6,300

 

 

To Capital Reserve A/c

 

 

6,300

 

(Balance in Shares Forfeiture Account of 1,800  re-issue, transferred to Capital Reserve Account)

 

 

 

 

 

 

 

 

Working Notes:

Share Forfeiture

7.5

Cr.

Share Forfeiture

4

Dr.

Balance in Share Forfeiture Account after re-issue

3.5

Cr. per share

Capital Reserve = No. of Shares reissued × Balance in Share Forfeiture Account after reissue (per share)

= 1,800 × Rs 3.5 (per share)

= Rs 6,300

Page No 8.122:

Question 45:

Super Star Ltd. makes an issue of 10,000 Equity Shares of ₹ 100 each, payable as:
 

 On application and allotment  ₹ 50 per share,
 On first call  ₹ 25 per share,
 On second and final call  ₹ 25 per share.

Members holding 400 shares did not pay the second and final call and the shares are duly forfeited, 200 of which are reissued as fully paid-up @₹ 50 per share. Pass journal entries in the books of the company.

Answer:

Book of Super Star Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

 Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

5,00,000

 

 

To Equity Share Application and Allotment A/c

 

 

5,00,000

 

(Share Application and Allotment money received for 10,000 shares at Rs 50 each)

 

 

 

 

 

 

 

 

 

Equity Share Application and Allotment A/c

Dr.

 

5,00,000

 

 

To Equity Share Capital A/c

 

 

5,00,000

 

(Share Application and Allotment money transferred to Equity Share Capital Account)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

2,50,000

 

 

To Equity Share Capital A/c

 

 

2,50,000

 

(Share First Call due on 10,000 shares of Rs 25 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,50,000

 

 

To Equity Share First-Call A/c

 

 

2,50,000

 

(First Call money received)

 

 

 

 

 

 

 

 

 

Equity Share Final Call A/c

Dr.

 

2,50,000

 

 

To Equity Share Capital A/c

 

 

2,50,000

 

(Equity Share Final Call due on 10,000 shares of Rs 25 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,40,000

 

 

Calls-in-Arrears A/c

Dr.

 

10,000

 

 

To Equity Share Final Call A/c

 

 

2,50,000

 

(Share Final Call of Rs 25 per share received on 9,600 shares and holders of 400 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

40,000

 

 

To Share Forfeiture A/c

 

 

30,000

 

To Calls-In-Arrears A/c

 

 

10,000

 

(400 shares of Rs 100 each forfeited for the non-payment final call Rs 25 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

10,000

 

 

Share Forfeiture A/c

Dr.

 

10,000

 

 

To Equity Share Capital A/c

 

 

20,000

 

(200 shares of Rs 100 each re-issued at Rs 50 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

5,000

 

 

To Capital Reserve A/c

 

 

5,000

 

(Balance in Share Forfeiture of 200 shares of after re-issue, transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note-

Share Forfeiture

Rs

75

Cr.

Share Forfeiture

Rs

50

Dr.

Balance in Share Forfeiture Account for re-issued shares

Rs

25

Cr. per share

Capital Reserve = Balance in Share Forfeiture Account for re-issued shares × Number of Share reissued

= Rs 25 × 200 = Rs 5,000

Page No 8.122:

Question 46:

A company issued 20,000 shares of ₹ 100 each payable ₹ 25 per share on application , ₹ 25 per share on allotment and the balance in two calls of  ₹ 25 each. The company did not make the final call of ₹ 25 per share. All the money was duly received with the exception of the amount due on the first call on 400 shares held by Mr. Modi. The Board of Directors forfeited these shares and subsequently reissued them @ ₹ 75 per share paid-up for a sum of ₹ 28,000. journalise the above transactions and prepare Share Capital Account .

Answer:

Issued and applied capital 20,000 shares of Rs 100 each

Payable as:

Application

Rs

25

 

Allotment

Rs

25

 

First Call

Rs

25

 

Called-up

Rs 

75

per share

Final Call

Rs

25

 

 

Rs

100

per share

 

Journal

Date

Particulars

L.F.

Debit Amount

 Rs

Credit

Amount

 Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

5,00,000

 

 

To Share Application A/c

 

 

5,00,000

 

(Share application money received for 20,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

5,00,000

 

 

To Share Capital A/c

 

 

5,00,000

 

(Application money transferred to Share Capital Account)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

5,00,000

 

 

To Share Capital A/c

 

 

5,00,000

 

(Share Allotment due on 20,000 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

5,00,000

 

 

To Share Allotment A/c

 

 

5,00,000

 

(Allotment money received)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

5,00,000

 

 

To Share Capital A/c

 

 

5,00,000

 

(Share First Call due on 20,000 shares of Rs 25 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,90,000

 

 

Calls-in-Arrears A/c

Dr.

 

10,000

 

 

To Share First Call A/c

 

 

5,00,000

 

(Share First Call Rs 25 per share received on 19,600 shares and a holder of 400 shares did not pay it)

 

 

 

 

 

 

 

 

 

Share Capital A/c

Dr.

 

30,000

 

 

To Share Forfeiture A/c

 

 

20,000

 

To Calls-in-Arrears A/c

 

 

10,000

 

(400 shares of Rs 100 each, Rs 75 called-up, forfeited for the non-payment of Share First Call Rs 25 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

28,000

 

 

Share Forfeiture A/c

Dr.

 

2,000

 

 

To Share Capital A/c

 

 

30,000

 

(400 shares of Rs 100 each, Rs 75 paid-up, reissued for the sum of Rs 28,000)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

18,000

 

 

To Capital Reserve A/c

 

 

18,000

 

(Balance in share forfeiture after re-issue, transferred to capital reserve)

 

 

 

 

 

 

 

 

 

Share Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Share Forfeiture

20,000

Share Application

5,00,000

Calls-in-Arrears

10,000

Share Allotment

5,00,000

 

 

Share First Call

5,00,000

 

 

Bank

28,000

Balance c/d

 

Share Forfeiture

2,000

 

 

 

 

 

15,30,000

 

15,30,000

 

 

 

 

Working Note-

Share Forfeiture Credit

20,000

Less: Share Forfeiture Debit

2,000

Balance in Share Forfeiture Account after re-issue

18,000

Capital Reserve = Balance in Share Forfeiture Account after re-issue

= Rs 18,000

Page No 8.122:

Question 47:

The Hindustan Manufacturing Ltd. had a total subscribed capital of ₹ 10,00,000 in Equity Shares of ₹ 10 each of which ₹ 7.50 were called-up. A final call of ₹ 2.50 was made and all amount paid except two calls of ₹ 2.50 each in respect  of 100 shares held by D . These shares were forfeited and reissued at ₹ 8 per share . 
Pass necessary journal entries (including that of cash) to record the transactions of final call , forfeiture of shares and reissue of forfeited shares . Also, prepare the Balance Sheet of the  company.

Answer:

Books of Hindustan Manufacturing Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Equity Share Final Call A/c

Dr.

 

2,50,000

 

 

To Equity Share Capital A/c

 

 

2,50,000

 

(Share Final Call due on 1,00,000 shares at Rs 2.5 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,49,750

 

 

Calls-in-Arrears A/c

Dr.

 

250

 

 

To Equity Share Final Call A/c

 

 

2,50,000

 

(Share Final Call of Rs 2.5 per share received from 99,900 shares and 100 shares did not pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

1,000

 

 

To Share Forfeiture A/c

 

 

500

 

To Calls-in-Arrears A/c

 

 

500

 

(100 shares of Rs 10 each forfeited for the non-payment of two calls of Rs 2.5 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

800

 

 

Share Forfeiture A/c

Dr.

 

200

 

 

To Equity Share Capital A/c

 

 

1,000

 

(100 shares of Rs 10 each reissued at Rs 8 per share, fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

300

 

 

To Capital Reserve A/c

 

 

300

 

(Balance in Share Forfeiture Account after re-issue of shares, transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Hindustan Manufacturing Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

10,00,000

b. Reserves and Surplus

2

300

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

10,00,300

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

10,00,300

Total

 

10,00,300

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

1,00,000 shares of Rs 10 each

10,00,000

 

Issued Share Capital

 

 

 1,00,000 shares of Rs 10 each

10,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 1,00,000 shares of Rs 10 each

10,00,000

   

 

2

Reserves and Surplus

 

 

Capital Reserve

300

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

10,00,300

 

 

 

Working Notes:

Share Forfeiture Credit (100 shares × Rs 5 each)

500

 

Less: Share Forfeiture Debit (100 share × Rs 2 each)

200

Loss on re-issue

Balance in Share Forfeiture Account after re-issue

300

 

Capital Reserve = Balance in Share Forfeiture Account after re-issue = Rs 300



Page No 8.123:

Question 48:

On 1st May,2014, Directors of a Limited Company forfeited 200 shares of ₹ 20 each , ₹ 15 per share called-up, on which ₹ 10 per share has been paid by A , the amount of the first call of ₹ 5 per share being unpaid . Ten days Later, the Directors reissued the forfeited shares to B credited as ₹ 15 per share paid-up , for a payment of ₹ 10 per share.
Give journal entries in the company's books to record the forfeited shares and their reissue.

Answer:

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2014

 

 

 

 

May 01

Share Capital A/c (15 × 200)

Dr.

 

3,000

 

 

To Share Forfeiture A/c (10 × 200)

 

 

2,000

 

To Calls-in-Arrears A/c (5 × 200)

 

 

1,000

 

(200 shares of Rs 20 each, Rs 15 called-up forfeited for the non-payment Rs 5 per share)

 

 

 

 

 

 

 

 

May 11

Bank A/c (10 × 200)

Dr.

 

2,000

 

 

Share Forfeiture A/c (5 × 200)

Dr.

 

1,000

 

 

To Share Capital A/c (15 × 200)

 

 

3,000

 

(200 shares of Rs 20 each re-issued at Rs 10 each, Rs 15 paid-up)

 

 

 

 

 

 

 

 

May 11

Share Forfeiture A/c

Dr.

 

1,000

 

 

To Capital Reserve A/c

 

 

1,000

 

(Balance in share forfeiture after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note-

Share Forfeiture Credit (at the time of forfeiture)

2,000

Less: Share Forfeiture Debit (at the time of re-issue)

1,000

Balance in Share Forfeiture Account after re-issue

1,000

Capital Reserve = Balance in Share Forfeiture Account after re-issue = Rs 1,000

Page No 8.123:

Question 49:

X Ltd . forfeited 100 shares of ₹ 10 each (₹ 8 called-up) issued at a premium of ₹ 2 per share to Mr. R, on which he had paid applications money of ₹ 5 per share , for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 70 shares were reissued to Mr . Sanjay as ₹ 8 called-up for ₹ 7 per share. Give necessary journal entries relating to forfeiture and reissue of shares.

Answer:

Books of X Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c (100 × 8)

Dr.

 

800

 

 

Securities Premium A/c (100 × 2)

Dr.

 

200

 

 

To Share Forfeiture A/c (100 × 5)

 

 

500

 

To Calls-in-Arrears A/c (100 × 5)

 

 

500

 

(100 shares of Rs 10 each, Rs 8 called-up with premium Rs 2 per share, forfeited for the non-payment of Rs 5 each including Rs 2 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

490

 

 

Share Forfeiture A/c

Dr.

 

70

 

 

To Share Capital A/c

 

 

560

 

(70 shares of Rs 10 each re-issued at Rs 7 per share, Rs 8 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

280

 

 

To Capital Reserve A/c

 

 

280

 

(Balance of 70 shares re-issued shares in Share Forfeiture Account transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note-

Share Forfeiture Credit

5

per share

Less: Share Forfeiture Debit

1

per share

Balance in Share Forfeiture of re-issued shares

4

per share

Capital Reserve = Balance in Share Forfeiture Account of re-issued shares × No. of shares re-issued

= 70 × 4

= Rs 280

Page No 8.123:

Question 50:

A Limited Company forfeited 100 Equity Shares of the face value of ₹ 10 each, ₹ 6 per share called-up, for non-payment of first call of ₹ 2 per share . The forfeited shares were subsequently reissued as fully paid-up @ ₹ 7 each.
Give necessary entries in the company's journal.  

Answer:

Books of A Ltd. Company

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

600

 

 

To Share Forfeiture A/c

 

 

400

 

To Calls-in-Arrears A/c

 

 

200

 

(100 shares of Rs 10 each Rs 6 called up, forfeited for the non-payment of first call Rs 2 per shares)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

700

 

 

Share Forfeiture A/c

Dr.

 

300

 

 

To Share Capital A/c

 

 

1,000

 

(100 shares of 10 each re-issued at Rs 7 per share, fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

100

 

 

To Capital Reserve A/c

 

 

100

 

(Balance in Share Forfeiture of re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note-

Share Forfeiture Credit

Rs

400

Share Forfeiture Debit

Rs

300

Balance in Share Forfeiture of re-issued shares

 

100

Capital Reserve = Balance in Share Forfeiture of re-issued shares = Rs 100

Page No 8.123:

Question 51:

Give necessary journal entries:
(i) The Directors of Devendra Ltd. resolved on 1st January, 2010 that Equity Shares of ₹ 10 each, ₹ 8 paid-up be forfeited for non-payment of final call of ₹ 2. On 1st February, 60 of these shares were reissued @ ₹ 7 per share as fully paid-up.
(ii) Virender Limited forfeited 20 shares of ₹ 100 each(₹ 60 called-up) issued at par to Mukesh on which he had paid ₹ 20 per share . Out of these, 15 shares were reissued to Sanjeev as ₹ 60 paid-up for ₹ 45 per share.

Answer:

(i)

Book of Devendra Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2010

 

 

 

 

Jan. 01

Equity Share Capital A/c

Dr.

 

1,000

 

 

To Share Forfeiture A/c

 

 

800

 

To Calls-in-Arrears A/c

 

 

200

 

(100 shares of Rs 10 each forfeited for the non-payment of Rs 2 per share)

 

 

 

 

 

 

 

 

Feb. 01

Bank A/c

Dr.

 

420

 

 

Share Forfeiture A/c

Dr.

 

180

 

 

To Equity Share Capital A/c

 

 

600

 

(60 shares of Rs 10 each re-issued at Rs 7 per share, fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

300

 

 

To Capital Reserve A/c

 

 

300

 

(Balance in Share Forfeiture Account of 60 shares after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note:

Forfeiture of re-issued shares

Share Forfeiture Credit

Rs

8

per share

Share Forfeiture Debit

Rs

3

per share

Balance in Share Forfeiture after re-issue

 

5

per share

General Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued

= Rs 5 × 60

= Rs 300

 

(ii)

Book of Virender Limited

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c

Dr.

 

1,200

 

 

To Share Forfeiture A/c

 

 

400

 

To Calls-in-Arrears A/c

 

 

800

 

(20 shares of Rs 100 each Rs 60 called-up forfeited for the non-payment of Rs 40 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

675

 

 

Share Forfeiture A/c

Dr.

 

225

 

 

To Share Capital A/c

 

 

900

 

(15 shares of Rs 100 each re-issued for Rs 45 per share as Rs 60 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

75

 

 

To Capital Reserve A/c

 

 

75

 

(Balance in Share Forfeiture of 15 re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

Working Note:

Forfeiture of reissued shares

Share Forfeiture Credit (at the time of forfeiture )

Rs

20

per share

Share Forfeiture Debit (at the time of re-issue)

Rs

15

per share

Balance in Share Forfeiture after re-issue

Rs

5

per share

Capital Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued

= Rs 5 × 15 Shares

= Rs 75


 

Page No 8.123:

Question 52:

Show the forfeiture and reissue entries under each of the following cases:

(i) X Ltd. forfeited 300 shares of ₹ 10 each, ₹ 8 called-up held by Mr . A for non-payment of second call money of ₹ 3 per share. These shares were reissued to Mr. Z for ₹ 10 per share as fully paid-up.
(ii) Y Ltd. forfeited 400 shares of ₹ 10 each, fully called-up , held by Mr. B for non-payment of final call money of ₹ 4 per share . These shares were reissued to Mr. T at ₹ 12 per share as fully paid-up.
(iii) Ltd. forfeited 250 shares of ₹ 10 each, fully called-up held by Mr. C for non-payment of allotment @ ₹ 8 per share as fully paid-up to Mr.P.

Answer:

(i)

Books of X Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital

Dr.

 

2,400

 

 

To Share Forfeiture A/c

 

 

1,500

 

To Calls-in-Arrears A/c

 

 

900

 

(300 shares of Rs 10 each on which had called Rs 8, forfeited for non-payment of second call Rs 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,000

 

 

To Share Capital A/c

 

 

3,000

 

(300 shares of Rs 10 each re-issued)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

1,500

 

 

To Capital Reserve A/c

 

 

1,500

 

(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Notes-

Share Forfeiture Credit (at the time of forfeiture of shares)

1,500

Less: Share Forfeiture Debit (at the time of re-issue shares)

NIL

Balance in Share Forfeiture after re-issue of shares

1,500

Capital Reserve = Balance in Share Forfeiture of re-issued shares

= Rs 1,500

(ii)

Books of Y Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c

Dr.

 

4,000

 

 

To Share Forfeiture A/c

 

 

2,400

 

To Calls-in-Arrears A/c

 

 

1,600

 

(400 shares of Rs 10 forfeited for the non-payment of final call Rs 4 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,800

 

 

To Share Capital A/c

 

 

4,000

 

To Securities Premium A/c

 

 

800

 

(400 shares of 10 each re-issued at Rs 12 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,400

 

 

To Capital Reserve A/c

 

 

2,400

 

(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

Working Notes-

Share Forfeiture Credit (at the time of forfeiture of shares)

2,400

Less: Share Forfeiture Debit (at the time of re-issue shares)

NIL

Balance in Share Forfeiture after re-issue of shares

2,400

Capital Reserve = Balance in Share Forfeiture of re-issued shares

= Rs 2,400

(iii)

Books of Z Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c

Dr.

 

2,500

 

 

To Share Forfeiture A/c (250×3)

 

 

750

 

To Calls-in-Arrears A/c

 

 

1,750

 

(250 shares of Rs 10 each forfeited for the non-payment Rs 7 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,000

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Share Capital A/c

 

 

2,500

 

(250 shares of Rs 10 each re-issued for Rs 8 per share as fully paid-up )

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

250

 

 

To Capital Reserve A/c

 

 

250

 

(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

Working Notes-

Share Forfeiture Credit (at the time of forfeiture of shares)

750

Less: Share Forfeiture Debit (at the time of re-issue shares)

500

Balance in Share Forfeiture after re-issue of shares

250

Capital Reserve = Balance in Share Forfeiture of re-issued shares = Rs 250

Page No 8.123:

Question 53:

Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) Basak Ltd. forfeited 20 shares of ₹ 10 each, ₹ 7 called-up on which the shareholder had paid application and allotment money of ₹ 5 per share. Out of these, 15 shares were reissued to Naresh as ₹ 7 per share paid-up for ₹ 8 per share.
(ii) Y Ltd. forfeited 90 shares of ₹ 10 each, ₹ 8 called-up issued at a premium of ₹ 2 per share to 'R' for non-payment  of allotment money of ₹ 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as ₹ 8 called-up for ₹ 10 per share.

Answer:

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

(i)

Share Capital A/c (20 Shares × 7)

Dr.

 

140

 

 

To Share Forfeiture A/c (20 Shares × 5)

 

 

 

100

 

To Calls-in- Arrears A/c (20 Shares × 2)

 

 

 

40

 

(20 Shares of Rs 10 each, Rs 7 called-up forfeited for the non-payment of call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (15 Shares × 8)

Dr.

 

120

 

 

To Share Capital A/c (15 Shares × 7)

 

 

 

105

 

To Securities Premium A/c (15 Shares × 1)

 

 

 

15

 

(15 shares were reissued as Rs 7 paid-up for Rs 8 per share)

 

 

 

 

 

 

 

 

 

 

 

Shares Forfeiture A/c (15 Shares × 5)

Dr.

 

75

 

 

To Capital Reserve A/c

 

 

 

75

 

(Transfer of profit on re-issue of 15 shares)

 

 

 

 

 

 

 

 

 

 

(ii)

Share Capital A/c (90 Shares × 8)

Dr.

 

720

 

 

Securities Premium A/c (90 Shares × 2)

Dr.

 

180

 

 

To Share Forfeiture A/c (90 Shares × 5)

 

 

 

450

 

To Share Allotment A/c (90 Shares × 5)

 

 

 

450

 

(Shares forfeited for non-payment of allotment)

 

 

 

 

 

Bank A/c (80 Shares × 10)

Dr.

 

800

 

 

To Share Capital A/c (80 Shares × 8)

 

 

 

640

 

To Securities Premium A/c (80 Shares × 2)

 

 

 

160

 

(80 shares were reissued for Rs 10, Rs 8 called-up)

 

 

 

 

 

 

 

 

 

 

 

Shares Forfeiture A/c (80 Shares × 5)

Dr.

 

400

 

 

To Capital Reserve A/c

 

 

 

400

 

(Transfer of profit on re-issue of 80 shares)

 

 

 

 

 

 

 

 

 

 

Working Notes-
Note 1





Note 2


Page No 8.123:

Question 54:

Star Ltd. forfeited 500 Equity Shares of ₹ 100 each for non-payment of first call of ₹ 30 per share . The final call of ₹ 10 per share was not yet made. Out of these, 60% shares were reissued for ₹ 39,000 fully paid. journalise the forfeiture and reissue of shares.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Equity Share Capital A/c  (500×90)

Dr.

 

45,000

 

 

  To  Equity Share 1st Call A/c (500×30)

 

 

 

15,000

 

  To Share Forfeited A/c (500×60)

 

 

 

30,000

 

( 500 equity shares forfeited for non-payment of final call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (300×130)

Dr.

 

39,000

 

 

      To Equity Share Capital A/c (300×100)

 

 

 

30,000

 

     To Security Premium Reserve A/c (300×30)

 

 

 

9,000

 

(300 shares are reissued @130 per share)

 

 

 

 

 

 

 

 

 

 

 

Share Forfeited A/c

Dr.

 

18,000

 

 

  To Capital Reserve A/c

 

 

 

18,000

 

( Profit on reissue of 300 shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Working Note:

Amount transferred to Capital Reserve

Shares Re-issued = 300

Shares Forfeited = 500

Amount forfeited in respect of 300 shares = Amount  Forfeited×Shares  Re-issuedShares  Forfeited

                                                                    = 30,000×300500=18,000

Page No 8.123:

Question 55:

A holds 100 shares of ₹ 10 each on which he has paid ₹ 1 per share on application.
B holds 200 shares of ₹ 10 each on which he has paid ₹ 1 and ₹ 2 per share on application and allotment respectively.
C holds 300 shares of ₹ 10 each and has paid ₹ 1 on application, ₹ 2 on allotment and ₹ 3 on first call. They all fail to pay their arrears and the second call of ₹ 2 per share . Shares are forfeited and subsequently reissued @ ₹ 11 per share as fully paid-up.
journalise the above.

Answer:

Application

Rs

1

 

Allotment

Rs

2

 

First Call

Rs

3

 

Second Call

Rs

2

 

 

Rs

8

Called-up

 

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Forfeiture of Shares

 

 

 

 

Shares of A

 

 

 

 

Share Capital A/c

Dr.

 

800

 

 

To Share Forfeiture A/c

 

 

100

 

To Calls-In-Arrears A/c

 

 

700

 

(100 shares of Rs 10 each, Rs 8 called-up, held by A forfeited for the non-payment of Rs 7 per share)

 

 

 

 

 

 

 

 

 

Shares of B

 

 

 

 

Share Capital A/c

Dr.

 

1,600

 

 

To Share Forfeiture A/c

 

 

600

 

To Calls-in-Arrears A/c

 

 

1,000

 

(200 shares of Rs 10 each, Rs 8 called-up, held by B forfeited for non-payment of Rs 5 per share)

 

 

 

 

 

 

 

 

 

Shares of C

 

 

 

 

Share Capital A/c

Dr.

 

2,400

 

 

To Share Forfeiture A/c

 

 

1,800

 

To Calls-in-Arrears A/c

 

 

600

 

(300 shares of Rs 10 each, Rs 8 called-up held by C forfeited for the non-payment of Rs 2 per share)

 

 

 

 

Re-issue of shares

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,600

 

 

To Share Capital A/c

 

 

6,000

 

To Securities Premium A/c

 

 

600

 

(600 shares of Rs 10 each re-issued at Rs 11 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,500

 

 

To Capital Reserve A/c

 

 

2,500

 

(Share Forfeiture transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note:

Share Forfeiture of 100 shares held by A

Rs

100

Cr.

Share Forfeiture of 200 shares held by B

Rs

600

Cr.

Share Forfeiture of 300 shares held by C

Rs

1,800

Cr.

Total Share Forfeiture credit (at the time of cancellation of shares)

Rs

2,500

 

Calculation of Capital Reserve

Total Share Forfeiture (at the time of cancellation of shares) = Rs 2,500 Cr.

Less: Total Share Forfeiture (at the time of re-issue of shares) = (NIL) Dr.

Capital Reserve =Rs 2,500



Page No 8.124:

Question 56:

A Ltd. company with registered capital of ₹ 5,00,000 in shares of ₹ 10 each issued 20,000 of such shares payable ₹ 2 on application , ₹ 4 on allotment , ₹ 2 on final call . All the money payable on allotment was duly received but on the first call being made, one shareholder paid the entire balance on his holding  of 300 shares and five shareholders with a total holding of 1,000 shares failed to pay their dues on the first call. These shares were forfeited for non-payment of first call money . Final  call was made and all the money due was received . Later on, forfeited shares were reissued @ ₹ 6 per share as fully paid-up.
Record the above in the company's journal and prepare the Balance Sheet.

Answer:

Amount payable as

Application

Rs

2

Allotment

Rs

4

First Call

Rs

2

Final Call

Rs

2

 

 

10

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

40,000

 

 

To Share Application A/c

 

 

40,000

 

(Share application money received for 20,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(Share application money of 20,000 shares at Rs 2 each transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

80,000

 

 

To Share Capital A/c

 

 

80,000

 

(Share allotment due on 20,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

80,000

 

 

To Share Allotment A/c

 

 

80,000

 

(Share allotment money received)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(Share first call due on 20,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

38,600

 

 

Call-in-Arrears A/c (1,000×2)

Dr.

 

2,000

 

 

To Share First Call A/c

 

 

40,000

 

To Calls-in-Advance (300×2)

 

 

600

 

(Share first call of Rs 2 per share received on 19,000 shares along with calls-in-advance of 300 shares at Rs 2 each and holders of 1,000 shares failed to pay the first call)

 

 

 

 

 

 

 

 

 

Share Capital A/c

Dr.

 

8,000

 

 

To Share Forfeiture A/c (1,000×6)

 

 

6,000

 

To Calls-In-Arrears A/c

 

 

2,000

 

(1,000 shares of Rs 10 each on which Rs 8 had called, forfeited for non-payment of first call Rs 2 per share)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

38,000

 

 

To Share Capital A/c

 

 

38,000

 

(Share final call due on 19,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

37,400

 

 

Calls-In-Advance A/c

Dr.

 

600

 

 

To Share Final Call A/c

 

 

38,000

 

(Share final call received from 18,700 shares and calls-in-advance of 300 shares adjusted)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,000

 

 

Share Forfeiture A/c

Dr.

 

4,000

 

 

To Share Capital A/c

 

 

10,000

 

(1,000 shares, re-issued at Rs 6 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,000

 

 

To Capital Reserve A/c

 

 

2,000

 

(Balance of Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

A Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

2,00,000

b. Reserves and Surplus

2

2,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

2,02,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

2,02,000

Total

 

2,02,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

 (Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

50,000 shares of Rs 10 each

5,00,000

 

Issued Share Capital

 

 

 20,000 shares of Rs 10 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

 20,000 shares of Rs 10 each

2,00,000

   

 

2

Reserves and Surplus

 

 

Capital Reserve

2,000

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

2,02,000

 

 

 

Working Notes:

Share Forfeiture Credit (at the time of forfeiture of shares)

6,000

Less: Share Forfeiture Debit (at the time of re-issue shares)

4,000

Balance in Share Forfeiture Account after re-issue of shares

2,000

Capital Reserve = Balance in Share Forfeiture Account of re-issued shares = Rs 2,000

Page No 8.124:

Question 57:

New Company Ltd. has a nominal capital of ₹ 2,50,000 in shares of ₹ 10. Of these, 4,000 shares were issued as fully paid in payment of building purchased , 8,000 shares were subscribed by the public and during the first year ₹ 5 per share were called-up, payable ₹ 2 on application , ₹ 1 on allotment, ₹ 1 on first call and ₹ 1 on second call . The amounts received in respect of these shares were:

 On 6,000 shares  Full amount called,
 On 1,250 shares  ₹ 4 per share,
 On 500 shares  ₹ 3 per share,
 On 250 shares  ₹ 2 per share.

The Directors forfeited the 750 shares on which less than ₹ 4 had been paid . The shares were subsequently reissued at ₹ 3 per share .
Pass journal entries recording the above transactions and prepare the company's Balance Sheet.

Answer:

Authorised Capital 25,000 shares of Rs 10 each

Issued Capital:

4,000 shares to the vendor of building

8,000 shares issued to public

Share Issued to public payable as:

Application

Rs

2

Per Share

(6,000 + 1,250 + 500 + 250

=

8,000)

Allotment

Re

1

Per Share

(6,000 + 1,250, + 500

=

7,750)

First Call

Re

1

Per Share

(6,000 + 1,250

=

7,250)

Second Call

Re

1

Per Share

(6,000 +

=

6,000)

 

 

5

Per Share

 

 

 

Shares to be forfeited (on which paid less then Rs 4) are as:

Shares on which paid Rs 3 per share

500

Shares on which paid Rs 2 per share

250

Number of shares to be forfeited      =

750

 

Books of New Company Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Building A/c

Dr.

 

40,000

 

 

To Vendor

 

 

40,000

 

(Building purchased)

 

 

 

 

 

 

 

 

 

Vendor

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(4,000 shares of Rs 10 each issued to the vendor in consideration of building purchased)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

16,000

 

 

To Share Application A/c

 

 

16,000

 

(Share application money received for 8,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

16,000

 

 

To Share Capital A/c

 

 

16,000

 

(Share application of 8,000 shares transferred to Share Capital Account)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

8,000

 

(Share allotment due on 8,000 shares at Re 1 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

7,750

 

 

Calls-In-Arrears A/c

Dr.

 

250

 

 

To Share Allotment A/c

 

 

8,000

 

(Share Allotment of Re 1 each received from 7,750 shares and holders of 250 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

8,000

 

(Share first call due on 8,000 shares at Re 1each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

7,250

 

 

Calls-In-Arrears A/c

Dr.

 

750

 

 

To Share First-Call A/c

 

 

8,000

 

(Share first call Re 1 received 7,250 shares and holders of 750 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Share Second Call A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

8,000

 

(Share final call due on 8,000 shares at Re 1 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,000

 

 

Calls-In-Arrears A/c

Dr.

 

2,000

 

 

To Share Second Call A/c

 

 

8,000

 

(Share second call Re 1 received from 6,000 shares and holder of 2,000 share failed to pay it)

 

 

 

 

 

 

 

 

 

Share Capital A/c (750 × 5)

Dr.

 

3,750

 

 

To Share Forfeiture A/c ((500 × 3) + (250 × 2))

 

 

2,000

 

To Calls in Arrears (500 × 2 + 250 × 3)

 

 

1,750

 

(750 shares of Rs 10 each Rs 5 called-up on which less than Rs 4 had received, were forfeited)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,250

 

 

Share Forfeiture A/c

Dr.

 

1,500

 

 

To Share Capital A/c

 

 

3,750

 

(750 shares re-issued at Rs 3 per share as Rs 5 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Capital Reserve

 

 

500

 

(Balance in Share Forfeiture Account transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

New Company Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

78,750

b. Reserves and Surplus

2

500

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

79,250

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

a. Fixed Assets

 

 

i. Tangible Assets

3

40,000

2. Current Assets

 

 

a. Cash and Cash Equivalents

4

39,250

Total

 

79,250

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

25,000 shares of Rs 10 each

2,50,000

 

Issued Share Capital

 

 

12,000 shares of Rs 10 each

1,20,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

4,000 shares of Rs 10 each(for consideration other than cash)

40,000

 

 

 8,000 shares of Rs 10 each, Rs 5 Called-up

40,000

 

 

Less: Calls in Arrears (1,250 shares × Re 1)

  (1,250)

78,750

 

 

 

2

Reserves and Surplus

 

 

Capital Reserve

500

   

 

3

Tangible Assets

 

 

Building

40,000

   

 

4

Cash and Cash Equivalents

 

 

Cash at Bank

39,250

 

 

 

Working Notes:

1. 

Calls-in-Arrears on Allotment (250 shares × Re 1)

250

Calls-in-Arrears on First Call (750 shares × Re 1)

750

Calls-in-Arrears on Second Call (2,000 shares × Re 1)

2,000

Total Calls-in-Arrears Debit

3,000

Less: Calls-in-Arrears Credit (at the time of forfeiture)

(1,750)

Calls-in-Arrears to be shown in the Balance Sheet

1250

2. Calculation of amount of share forfeiture credited on shares re-issued shares

Share Forfeiture of 250 shares (on which  Rs 2 per share paid)

Rs

500

Cr.

Share Forfeiture of 500 shares (on which  Rs 3 per share paid)

Rs

1,500

Cr.

Total Share Forfeiture credit (on 750 shares)

Rs

2,000

 

Calculation of Capital Reserve

Total Share Forfeiture (on 750 shares) = Rs 2,000 credit

Less: Share Forfeiture (750 shares × Rs 2 per share) = Rs (1,500) debit

Capital Reserve = Rs 500

Page No 8.124:

Question 58:

X Ltd. invited  applications for 10,000 Equity Shares of ₹ 10 each for public subscription. The amount of these shares was payable as:
On application ₹ 1 per share, on allotment ₹ 2 per share , on first call ₹ 3 per share and on second and final call ₹ 4 per share.
All sums payable on application, allotment and calls were duly received with the following exceptions: 
(i)   A, who held 200 shares, failed to pay the money on allotments and calls.
(ii)  B, to whom 150 shares were allotted, failed to pay the money on first call and final call.
(iii) C, who held 50 shares , did not pay the amount of second and final call.
The shares of A,B and C were forfeited and were subsequently reissued for cash as fully paid-up at a discount of 5%.
Pass necessary journal entries to record these transactions in the books of X Ltd.

Answer:

Issued and Applied 10,000 Shares of Rs 10 each

 

 

 

 

 

A

 

B

 

C

 

Paid-up Shares

Application

Rs

1

(10,000

 

 

 

 

 

 

=

10,000)

Allotment

Rs

2

(10,000

200

 

 

 

 

=

9,800)

First Call

Rs

3

(10,000

200

150

 

 

=

9,650)

Second and Final Call

Rs

4

(10,000

200

150

50

=

9,600)

 

 

10

 

 

 

 

 

 

 

 

 

 

Books of X Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

10,000

 

 

To Equity Share Application A/c

 

 

10,000

 

(Share application received for 10,000 shares at Re 1 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

10,000

 

 

To Equity Share Capital A/c

 

 

10,000

 

(Share application money transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

20,000

 

 

To Equity Share Capital A/c

 

 

20,000

 

(Share allotment due on 10,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

19,600

 

 

Calls-In-Arrears A/c

Dr.

 

400

 

 

To Equity Share Allotment A/c

 

 

20,000

 

(Share allotment of Rs 2 per share received on 9,800 shares and holder of 200 failed to pay to it)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

30,000

 

 

To Equity Share Capital

 

 

30,000

 

(Share first call due on 10,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

28,950

 

 

Calls-In-Arrears A/c

Dr.

 

1,050

 

 

To Equity Shares First Call A/c

 

 

30,000

 

(Share first call received on 9,650 shares and holders of 350 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Final Call A/c

Dr.

 

40,000

 

 

To Equity Share Capital A/c

 

 

40,000

 

(Share final call due on 10,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

38,400

 

 

Calls-In-Arrears A/c

Dr.

 

1,600

 

 

To Equity Share Final Call A/c

 

 

40,000

 

(Holders of 9,600 shares paid final call and holders of 400 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

2,000

 

 

To Share Forfeiture A/c (200 × 1)

 

 

200

 

To Calls-In-Arrears A/c (200 × 9)

 

 

1,800

 

(200 shares held by A on which application money Re 1 was received, forfeited)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

1,500

 

 

To Share Forfeiture A/c (150 × 3)

 

 

450

 

To Calls-In-Arrears A/c (150 × 7)

 

 

1,050

 

(150 shares of Rs 10 each held by B forfeited for the non-payment of two calls Rs each)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

500

 

 

To Share Forfeiture A/c (50 × 6)

 

 

300

 

To Calls-in-Arrears A/c (50 × 4)

 

 

200

 

(50 shares of Rs 10 each held by C forfeited for the non-payment of final call Rs 4 each)

 

 

 

 

 

 

 

 

 

Bank A/c (400 × 9.5)

Dr.

 

3,800

 

 

Share Forfeiture A/c (400 × .5)

Dr.

 

200

 

 

To Equity Share Capital A/c

 

 

4,000

 

(400 shares of Rs 10 each re-issued at Rs 9.5 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

750

 

 

To Capital Reserve A/c

 

 

750

 

(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note:

Share Forfeiture of 100 shares held by A

Rs

200

Cr.

Share Forfeiture of 200 shares held by B

Rs

450

Cr.

Share Forfeiture of 300 shares held by C

Rs

300

Cr.

Total Share Forfeiture credit (at the time of cancellation of shares)

Rs

950

 

Calculation of Capital Reserve

Total Share Forfeiture (at the time of cancellation of shares) = Rs 950

Less: Total Share Forfeiture (at the time of re-issue of shares) = Rs (200)

Capital Reserve                                                                    = Rs 750

Page No 8.124:

Question 59:

A share of ₹ 100 issued at a premium  of ₹ 10 on which ₹ 80 (including premium) was called and ₹ 60 (including premium) was paid, has been forfeited. This share was afterwards reissued as fully paid-up for ₹ 70 . Give Journal entries to record the above.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c (Rs 80 – 10 premium)

Dr.

 

70

 

 

To Share Forfeiture (Rs 60 – 10 premium)

 

 

50

 

To Calls-In-Arrears A/c

 

 

20

 

(A share of Rs 100 on which Rs 70 called excluding the amount of securities premium Rs 10, forfeited for non-payment of Rs 20)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

70

 

 

Share Forfeiture A/c

Dr.

 

30

 

 

To Share Capital A/c

 

 

100

 

(A share of Rs 100 re-issued at Rs 70 as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

20

 

 

To Capital Reserve A/c

 

 

20

 

(Balance in Share Forfeiture after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

Page No 8.124:

Question 60:

Pass journal entries in the following cases:

M Ltd  forfeited 200 Equity Shares of ₹10 each , issued at a premium of  ₹ 5 per share , held by Ram for non-payment of the final call of  ₹ 3 per share . Of these , 100 shares were reissued  to Vishu at a discount of   ₹ 4 per share .

Answer:

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

20,000

 

 

To Share Forfeiture A/c (2,000 × Rs 7)

 

 

14,000

 

To Calls-in-Arrears A/c

 

 

6,000

 

(2,000 shares of Rs 10 each forfeited for the non-payment of Rs 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

600

 

 

Share Forfeiture A/c (100 × Rs 4)

Dr.

 

400

 

 

To Equity Share Capital A/c

 

 

1,000

 

(100 shares of Rs 10 each reissued at Rs 6 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

300

 

 

To Capital Reserve A/c

 

 

300

 

(Balance in Share Forfeiture of 100 re-issued shares transferred to Capital Reserve )

 

 

 

 

 

 

 

 

 

Working Note-

Share Forfeiture of re-issued shares

Share Forfeiture

Cr.

Rs 7

per share

Share Forfeiture

Dr.

Rs 4

per share

Balance in share forfeiture after re-issue

Cr.

3

per share

Capital Reserve = Balance in Share Forfeiture after re-issue × No. of shares re-issued

= Re 3 × 100 shares

= Rs 300

Page No 8.124:

Question 61:

 VT Ltd forfeited 200 shares of ₹ 10 each , issued at a premium of ₹ 5 per share , held by Mohan for non-payment of the final call of ₹ 3 per share . 100 out of these shares  were reissued to Narendra at a discount  of ₹ 4 per share . Journalise.

Answer:

 

Books of VT Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c (200 × Rs 10)

Dr.

 

2,000

 

 

To Share Forfeiture A/c (200 × Rs 7)

 

 

1,400

 

To Calls-in-Arrears A/c

 

 

600

 

(200 shares of Rs 10 each forfeited for non-payment of Rs 3 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

600

 

 

Share Forfeiture A/c (100 × Rs 4)

Dr.

 

400

 

 

To Share Capital A/c

 

 

1,000

 

(100 shares of Rs 10 each re-issued at Rs 6 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

300

 

 

To Capital Reserve A/c

 

 

300

 

(Balance in share forfeiture of 100 shares transferred to capital reserve)

 

 

 

 

 

 

 

 

 

Working Notes:

Share Forfeiture of re-issued shares

Share Forfeiture Cr.

Rs 7

per share

Share Forfeiture Dr.

Rs 4

per share

Balance in Share Forfeiture after re-issue

Rs 3

per share

 

Capital Reserve

= Balance in Share Forfeiture after re-issue (per share) × No. of shares re-issued

 

= Re 3 × 100

 

= Rs 300

 

Page No 8.124:

Question 62:

The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per share , for the non-payment of the first call money of ₹ 2 per share . The final call of ₹ 2 per share has not been made. Half the forfeited shares were reissued at ₹ 1,500 as fully paid-up. Record the journal  entries for the forfeiture and reissue of shares.

Answer:

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c (300 × 8)

Dr.

 

2,400

 

 

To Share Forfeiture A/c (300 × 6)

 

 

1,800

 

To Calls-In-Arrears (300 × 2)

 

 

600

 

(300 shares of Rs 10 each on which  Rs 8 had called, forfeited for non-payment Rs 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,500

 

 

To Share Capital A/c

 

 

1,500

 

(150 shares of Rs 10 each re-issued for the sum of Rs 1,500)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

900

 

 

To Capital Reserve A/c

 

 

900

 

(Balance in Share Forfeiture Account of 150 re-issued shares, transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Notes

Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture)

Cr.

6

 

Less: Share Forfeiture (at the time of re-issue)

Dr.

NIL

 

Balance in Share Forfeiture after re-issue

Cr.

6

per share

Capital Reserve = Balance in Share Forfeiture after reissue (per share) × Number of Shares Reissued

= Rs 6 × 150

= Rs 900



Page No 8.125:

Question 63:

JCV Ltd., forfeited 200 shares of ₹ 10 each issued at a premium of ₹ 2 per share for the non-payment of allotment money of ₹ 3 per share (including premium). The first and final call of  ₹ 4 per share has not been made as yet . 50% of the forfeited shares were reissued at ₹ 8 per share  as fully paid-up . Pass necessary Journal entries for the forfeiture and reissue of shares.

Answer:

Application

Rs

5

 

Allotment

Rs

3

(1+2)

First and Final Call

Rs

4

 

 

 

12

(10+2)

Called-up = Application + Allotment

= Rs 5 + 3 (including premium Rs 2)

Book of JCV Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Capital A/c (200×6)

Dr.

 

1,200

 

 

Securities Premium A/c (200×2)

Dr.

 

400

 

 

To Share Forfeiture A/c (200×5)

 

 

1,000

 

To Calls-in-Arrears A/c (200×3)

 

 

600

 

(200 shares of Rs 10 each on which Rs 8  had called (including Rs 2 premium), forfeited for the non-payment of allotment Rs 3 (including Rs 2 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

800

 

 

Share Forfeiture A/c

Dr.

 

200

 

 

To Share Capital A/c

 

 

1,000

 

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

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

300

 

 

To Capital Reserve

 

 

300

 

(Amount of share forfeiture of 100 re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note

Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture)

Cr.

5

 

Share Forfeiture (at the time of re-issue)

Dr.

2

 

Balance in Share Forfeitre (after re-issue)

Cr.

3

per share

Capital Reserve

= Amount of share forfeitureTotal shares forfeited×Shares reissued - Loss on reissue of forfeited shares=1000200×100-100×2 =500-200=300

Page No 8.125:

Question 64:

Pass necessary journal entries in the books of the company for the following transactions:
Vishesh Ltd. forfeited 1,000 Equity Shares of ₹ 10 each issued at a premium of ₹ 2 per share for non-payment of allotment money of ₹ 5 per share including premium. The final call of ₹ 2 per share was not yet called on these shares. Of the forfeited shares 800 shares were reissued at ₹ 12 per share as fully paid-up.
The remaining shares were reissued at ₹ 11 per share fully paid-up.

Answer:

Journal
In the books of Vishesh Ltd.

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

Equity Share Capital A/c (8×1,000)

Dr.

 

8,000

 

 

Securities Premium A/c (2×1,000)

Dr.

 

2,000

 

 

To Share Forfeiture A/c

 

 

 

5,000

 

    To Calls-in-Arrears

 

 

 

5,000

 

(1,000 shares of Rs 10 each issued at premium of Rs 2 forfeited for non payment of allotment money of Rs 5 including premium, final call of Rs 2 not yet made)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (12×800)

Dr.

 

9,600

 

 

To Share Capital A/c

 

 

 

8,000

 

   To Securities Premium A/c

 

 

 

1,600

 

(800 shares reissued at Rs 12 fully paid up)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (11×200)

Dr.

 

2,200

 

 

To Share Capital A/c

 

 

 

2,000

 

   To Securities Premium A/c

 

 

 

200

 

(200 shares reissued at Rs 11 fully paid up)

 

 

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

5,000

 

 

To Capital Reserve A/c

 

 

 

5,000

 

(Profit on reissue transferred to capital reserve)

 

 

 

 

 

Page No 8.125:

Question 65:

150 shares of ₹ 10 each issued at a premium of ₹ 4 per share payable with allotment were forfeited for non-payment of allotment money
of ₹ 8 per share including premium. The first and final call of ₹ 4 per share was not made. The forfeited shares were reissued at ₹ 15 per share fully paid-up.
Pass Journal entries in the books of X Ltd. for the above.

Answer:

 
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
  Share Capital A/c
Dr.
 
900
 
  Securities Premium A/c
Dr.
 
600
 
    To Share Allotment A/c    
1,200
    To Share Forfeiture A/c    
300
  (150 shares of Rs 10 each forfeited for non–payment of allotment money of Rs 8 per share including premium of Rs 4 per share)      
           
  Bank A/c
Dr.
 
2,250
 
    To Share Capital A/c    
1,500
    To Securities Premium A/c    
750
  (150 shares of Rs 10 each reissued for Rs 15 per share fully paid–up)      
         
  Share Forfeiture A/c
Dr.
 
300
 
    To Capital Reserve A/c    
300
  (Balance of Share Forfeiture Account transferred to Capital Reserve Account)      

Page No 8.125:

Question 66:

Commence Publications Ltd. issued 50,000 Equity Shares of ₹ 10 each at a premium of 10% payable as under:

 On application  ₹ 2, On first call  ₹ 2,
 On allotment  ₹ 5, On final call  ₹ 2.

The calls were made by the company and all the money was duly received except the allotment and call money on 500 shares. These shares were, therefore, forfeited and later reissued @ ₹ 9 per share as fully paid-up.
Pass necessary journal entries to record the above transactions.

Answer:

Issued and applied 50,000 equity shares at Rs 10 each at a premium Re 1

Application

Rs

2

 

Allotment

Rs

5

(4+1)

First Call

Rs

2

 

Final Call

Rs

2

 

 

Rs

11

(10+1) called-up

 

Books of Commerce Publications Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

1,00,000

 

 

To Equity Share Application A/c

 

 

1,00,000

 

(Share application received for 50,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

1,00,000

 

 

To Equity Share capital A/c

 

 

1,00,000

 

(Share application money transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

2,50,000

 

 

To Equity Share Capital A/c

 

 

2,00,000

 

To Securities Premium A/c

 

 

50,000

 

(Share allotment due on 50,000 shares at Rs 5 each including Re1 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,47,500

 

 

Calls-in-Arrears A/c

Dr.

 

2,500

 

 

To Equity Share Allotment

 

 

2,50,000

 

(Share allotment at Rs 5 each, received on 49,500 shares and holders of 500 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share First Calls A/c

Dr.

 

1,00,000

 

 

To Equity Share capital

 

 

1,00,000

 

(First call due on 50,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

99,000

 

 

Calls-in-Arrears A/c

Dr.

 

1,000

 

 

To Equity Share first call A/c

 

 

1,00,000

 

(First call received on 49,500 shares and 500 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Shares capital A/c

Dr.

 

4,000

 

 

Securities Premium A/c

Dr.

 

500

 

 

To Share Forfeiture

 

 

1,000

 

To Calls-in-Arrears A/c

 

 

3,500

 

(500 shares forfeited for the non-payment of Rs 7 including Re 1 premium)

 

 

 

 

 

 

 

 

 

Equity Share Final Call A/c

Dr.

 

99,000

 

 

To Equity Share Capital A/c

 

 

99,000

 

(Share final call due 49,500 share at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

99,000

 

 

To Equity Share Final Call A/c

 

 

99,000

 

(Share final call money received)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,500

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Equity Share Capital A/c

 

 

5,000

 

(500 shares of Rs10 each reissued for Rs 9 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Capital Reserve A/c

 

 

500

 

(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note:

Share Forfeiture Credit

1,000

Less: Share Forfeiture Debit

500

Balance in Share Forfeiture (after re-issue)

500

Capital Reserve = Balance in Share Forfeiture (after re-issue)

= Rs 500

Page No 8.125:

Question 67:

Gaurav applied for 5,000 shares of ₹ 10 each at a premium of 2.50 per share. But he was allotted only 2,500 shares on pro rata basis . After having paid ₹ 3 per share on application, he did not pay allotment money of ₹ 4.50 per share (including premium) and on his subsequent failure to pay the first call of ₹ 2 per share, his shares were forfeited. These shares were reissued at the rate of ₹ 8 per share credited as fully paid .
Pass journal entries to record the forfeiture and reissue of shares.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Equity Share Capital A/c (2,500×7)

Dr.

 

17,500

 

 

Security Premium Reserve A/c

Dr.

 

3,750

 

 

  To Equity Share Allotment A/c

 

 

 

3,750

 

  To  Equity Share First Call A/c (2,500×2)

 

 

 

5,000

 

  To Share Forfeited A/c

 

 

 

12,500

 

( 2,500 shares forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,500×8)

Dr.

 

20,000

 

 

Share Forfeited A/c (2,500×2)

Dr.

 

5,000

 

 

  To Equity Share Capital A/c (2,500×10)

 

 

 

25,000

 

(Share reissued @Rs 8 per share fully paid-up)

 

 

 

 

 

 

 

 

 

 

 

Share Forfeited A/c (12,500 – 5,000)

Dr.

 

7,500

 

 

  To Capital Reserve A/c

 

 

 

7,500

 

( Profit on reissue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN 1: Calculation of Amount unpaid on Allotment

Amount received on application (5,000×3)          = 15,000

Less: Amount adjusted on application (2,500×3) =  7,500

Excess amount received on application                =  7,500

 

Amount due on allotment (2,500×4.5) = 11,250

Amount unpaid on allotment               = 3,750 (11,250 – 7,500)

 

Note:

Rs 7,500 received on application will be transferred to allotment, but first of all we have to transfer such amount to Capital A/c and rest would be transferred to Securities Premium A/c. Capital on allotment is Rs 5,000 (2,500×2) that is fully received and balance amount of advance Rs 2,500 will be transferred to Securities Premium A/c. So, amount of premium unpaid is Rs 3,750 (2,500×2.5 –2,500).

Page No 8.125:

Question 68:

A Ltd issued 20,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share, payable as ₹ 7 (including premium) on application , ₹ 5 on allotment and the balance after three months of allotment.
A shareholder to whom 200 shares were allotted failed to pay the allotment and call money and his shares were forfeited. 160 of the forfeited shares were reissued for ₹ 1,600.
Give necessary entries in company's journal and the Balance Sheet.

Answer:

Issued and Applied 20,000 equity shares of Rs 10 each at a premium of Rs 5

Application

Rs

7

(2+5)

Allotment

Rs

5

 

First and Final Call

Rs

3

 

 

 

15

(10+5) per share

 

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

140,000

 

 

To Equity Share Application A/c

 

 

140,000

 

(Share application money received for 20,000 shares at Rs 7 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

1,40,000

 

 

To Equity Share Capital A/c

 

 

40,000

 

To Securities Premium A/c

 

 

1,00,000

 

(Share application money of 20,000 shares transferred Share Capital at Rs25 per share and Securities Premium at Rs 5 per share)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c

 

 

1,00,000

 

(Share allotment due on 20,000 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

99,000

 

 

Calls-in-Arrears A/c

Dr.

 

1,000

 

 

To Equity Share Allotment A/c

 

 

1,00,000

 

(Share allotment received on 19,800 shares and a holder of 200 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share First and Final call A/c

Dr.

 

60,000

 

 

To Equity Share Capital A/c

 

 

60,000

 

(First and final call due on 20,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

59,400

 

 

Calls-in-Arrears A/c

Dr.

 

600

 

 

To Equity Share First and Final Call A/c

 

 

60,000

 

(First and final call received on 19,800 shares and a holder of 200 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

2,000

 

 

To Share Forfeiture A/c (Rs 2 × 200 Shares)

 

 

400

 

To Calls-in-Arrears A/c

 

 

16,00

 

(200 shares of Rs 10 each forfeited for the non-payment amount due Rs 8 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,600

 

 

To Equity Share Capital A/c

 

 

1,600

 

(160 shares of Rs 10 each re-issued for the sum of Rs 1,600)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

320

 

 

To Capital Reserve A/c

 

 

320

 

(Balance in Share Forfeiture of 160 re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

A Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,99,680

b. Reserves and Surplus

2

1,00,320

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

3,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

3,00,000

Total

 

3,00,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

…… Equity Shares of Rs 10 each

-

 

Issued Share Capital

 

 

 20,000 Equity Shares of Rs 10 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

19,960 Equity Shares of Rs 10 each

1,99,600

 

 

 Add: Shares Forfeited (40 shares × Rs 2)

80

1,99,680

   

 

2

Reserves and Surplus

 

 

Securities Premium

1,00,000

 

 

Capital Reserve

320

1,00,320

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

3,00,000

 

 

 

Working Notes: 1. Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture after deducting premium)

Cr.

2

(7 – 5)

Less: Share Forfeiture (at the time of re-issue)

Dr.

NIL

 

Balance in Share Forfeiture after re-issue

Cr.

2

per share

Capital Reserve = Balance in Share Forfeiture after reissue (per share) × Number of Shares Re-issued = Rs 2 × 160 = Rs 320

2. Calculation of balance remaining in Share Forfeiture Account (to be shown in the Balance Sheet)

Share Forfeiture (at the time of forfeiture of 200 shares)

=

400

Debit

Less: Share Forfeiture (at the time re-issue of 160 shares)

=

(320)

Credit

Balance in Share Forfeiture Account (for 40 shares which are not re-issued)

=

Rs 80

Debit

 

Page No 8.125:

Question 69:

Kamal Ltd. was formed on 1st April, 2010 with an authorised capital of ₹ 2,00,000 , divided into 2,000 Equity Shares of ₹ 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of ₹ 5 per share payable as:

On application  ₹ 10 per share,
 On allotment  ₹ 25 per share(including premium),
 On first call ₹ 40 per share,
 On final call  ₹ 30 per share.

Applications were received for 900 shares which were duly allotted and the allotment money was received in full . At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ ₹ 60 per share , ₹ 70 per share paid-up.
Final call has not been made.
You are required to
(i) give necessary journal entries to record the above transactions and
(ii) show how  share capital would appear in the Balance Sheet of the company.

Answer:

Authorised Capital: 2,000 equity shares at Rs 100 each

Issued Capital:

1,000 equity shares at Rs 100 each to the vendor of the building

1,000 equity shares at Rs 100 each with a premium Rs 5 to the public

Applied by public: 900 equity shares

Payable by public as:

Application

Rs

10

 

Allotment

Rs

25

(20+5)

First Call

Rs

40

 

Called-up

 

75

(70+5)

Final Call

Rs

30

 

 

Rs

105

(100+5)

 

Books of Kamal Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Building A/c

Dr.

 

1,00,000

 

 

To Vendor A/c

 

 

1,00,000

 

(Building purchased from the vendor)

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c

 

 

1,00,000

 

(1,000 equity shares of Rs 100 each issued to the vendor of building)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,000

 

 

To Equity Share Application A/c

 

 

9,000

 

(Share application money received for 900 shares at Rs 10 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

9,000

 

 

To Equity Share Capital

 

 

9,000

 

(Share application money of 900 shares at Rs 10 each transferred to Share Capital)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

22,500

 

 

To Securities Premium

 

 

4,500

 

To Equity Share Capital A/c

 

 

18,000

 

(Share allotment due on 900 shares at Rs 25 each including Rs 5 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

22,500

 

 

To Equity Share Allotment A/c

 

 

22,500

 

(Share allotment money received on 900 shares at Rs 25 each)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

36,000

 

 

To Equity Share Capital A/c

 

 

36,000

 

(First call due on 900 shares at Rs 40 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

32,000

 

 

Calls-in-Arrears A/c

 

4,000

 

 

To Equity Share First-call A/c

 

 

36,000

 

(First call received on 800 shares and a holder of 100 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

7,000

 

 

To Share Forfeiture A/c

 

 

3,000

 

To Calls-in-Arrears A/c

 

 

4,000

 

(100 shares of Rs 100 each, Rs 70 called-up forfeited for the non-payment of Rs 40)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,000

 

 

Share Forfeiture A/c

Dr.

 

1,000

 

 

To Equity Share Capital A/c

 

 

7,000

 

(100 shares of Rs 100 each, re-issued at Rs 60 per share as Rs 70 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,000

 

 

To Capital Reserve A/c

 

 

2,000

 

(Balance in Share Forfeiture the Account after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act 2013, the Company's Balance Sheet is presented as follows.

Kamal Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,63,000

b. Reserves and Surplus

2

6,500

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

1,69,500

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

a. Fixed Assets

 

 

i. Tangible Assets

3

1,00,000

2. Current Assets

 

 

a. Cash and Cash Equivalents

4

69,500

Total

 

1,69,500

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount 

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

2,000 Equity Shares of Rs 100 each

2,00,000

 

Issued Share Capital

 

 

2,000 Equity Shares of Rs 100 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,000 Equity Shares of Rs 100 each(for consideration other than cash)

1,00,000

 

 

 900 Equity Shares of Rs 100 each, Rs 70 Called-up

63,000

1,63,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

4,500

 

 

Capital Reserve

2,000

6,500

   

 

3

Tangible Assets

 

 

Building

1,00,000

   

 

4

Cash and Cash Equivalents

 

 

Cash at Bank

69,500

 

 

 

Working Notes:

Share Forfeiture (at the time of forfeiture)

3,000

Credit

Less: Share Forfeiture (at the time of re-issue)

1,000

Debit

Balance in Share Forfeiture (after re-issue)

2,000

Credit

Capital Reserve = Balance in Share Forfeiture (after re-issue) = Rs 2,000



Page No 8.126:

Question 70:

Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹  10 each, issued the entire amount of the shares payable as:
                  ₹  5 on application  (including premium ₹ 2 per share),
                  ₹  4 on allotment, and
                  ₹  3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on  which the allotment  money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7  per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.

Answer:

Authorised capital 20,000 shares of 10 each

Issued and applied 20,000 shares of Rs 10 each at a premium Rs 2

Payable as:

Application

=

Rs 5

(3+2)

Allotment

=

Rs 4

 

First and Final Call

=

Rs 3

 

 

 

Rs 12

(10+2)

 

Books of Krishna & Co. Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

1,00,000

 

 

To Equity Share Application A/c

 

 

1,00,000

 

(Share application money received for 20,000 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

1,00,000

 

 

To Equity Share Capital A/c

 

 

60,000

 

To Securities Premium A/c

 

 

40,000

 

(Share application of 20,000 shares transferred to Shares Capital at Rs 3 per share and Securities Premium and Rs 2 per share)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

80,000

 

 

To Equity Share Capital A/c

 

 

80,000

 

(Share allotment due on 20,000 shares at Rs 4 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

79,200

 

 

Calls-in-Arrears A/c

Dr.

 

800

 

 

To Equity Share Allotment A/c

 

 

80,000

 

(Share allotment received on 19,800 shares and holders of 200 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share first and final call A/c

Dr.

 

60,000

 

 

To Equity Share Capital A/c

 

 

60,000

 

(First and Final call due on 20,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

58,500

 

 

Calls-in-Arrears A/c

Dr.

 

1,500

 

 

To Equity Share First And Final Call A/c

 

 

60,000

 

(Share first and final call of Rs 3 each received on 19,500 shares and holders of 500 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

2,000

 

 

To Share Forfeiture A/c

 

 

600

 

To Calls-in-Arrears A/c

 

 

1,400

 

(200 shares of Rs 10 each forfeited for the non-payment of allotment Rs 4 and call Rs 7 per share)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

3,000

 

 

To Share Forfeiture A/c

 

 

2,100

 

To Calls-in-Arrears A/c

 

 

900

 

(300 shares of Rs 10 each forfeited for the non-payment of call money Rs 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,800

 

 

Share Forfeiture A/c

Dr.

 

1,200

 

 

To Share Capital

 

 

4,000

 

(400 shares of Rs 10 each re-issued at Rs 7 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

800

 

 

To Capital Reserve A/c

 

 

800

 

(Balance in share forfeiture of 400 shares transferred to Capital Reserve)

 

 

 

         

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Krishna & Co Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

1,99,700

b. Reserves and Surplus

2

40,800

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

2,40,500

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

2,40,500

Total

 

2,40,500

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

20,000 Equity Shares of Rs 10 each

2,00,000

 

Issued Share Capital

 

 

 20,000 Equity Shares of Rs 10 each

2,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

19,900 Equity Shares of Rs 10 each

1,99,000

 

 

 Add: Shares Forfeited (100 shares × Rs 7)

700

1,99,700

   

 

2

Reserves and Surplus

 

 

Securities Premium

40,000

 

 

Capital Reserve

800

40,800

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

2,40,500

 

 

 

Working Notes:

1.

Capital Reserve of 200 shares on which only application received

 

Share Forfeiture Cr.

3

per share (excluding premium)

 

Share Forfeiture Dr.

3

per share

 

Balance of Share Forfeiture

NIL

 

 

2.

Capital Reserve of 200 shares on which application and allotment received

 

Share Forfeiture Cr.

Rs 7

per share (excluding premium)

 

Share Forfeiture Dr.

Rs 3

per share

 

Balance in Share Forfeiture

Rs 4

per share

 

Capital Reserve

=

200 Shares × Balance of Share Forfeiture (per share)

 

=

200 × 4

 

=

Rs 800

 

Page No 8.126:

Question 71:

Midee  Ltd. invited applications for issuing 27,000 shares of ₹  100 each payable  as follows:
      ₹  50per share on application;
     ₹  10per share on allotment; and
    Balanceon First and Final call.
Applications were received for 40,000 shares. Full allotment was made to the applicants of 7,000 shares. The remaining applicants were allotted 20,000 shares on pro rata basis. Excess money received on applications was adjusted towards allotment and call.
Asha, holding 600 shares was belonged  to the category of applicants to whom full allotment was made ,paid the call money at the time of allotment . Ankur, who belonged to the category of applicants to whom shares were allotted on pro rata basis  did not pay anything after application on his 200 shares . Ankur's shares were forfeited after the First and Final call. These shares were later reissued at  ₹  105 per share as fully paid-up.
Pass necessary journal entries in the books of Midee Ltd . for the above transactions, by opening Calls-in-Arrears and Calls-in-Advance Accounts wherever necessary.

Answer:

Journal

Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
  Bank A/c (40,000 × 50)
Dr.
 
20,00,000
 
    To Equity Share Application A/c
 
 
 
20,00,000
  (Application money received)
 
 
 
 
   
 
 
 
 
  Equity Share Application A/c
Dr.
 
20,00,000
 
    To Equity Share Capital A/c(27,000 × 50)
 
 
 
13,50,000
    To Calls in Advance A/c(13,000 × 50)
 
 
 
6,50,000
  (Application money transferred)
 
 
 
 
   
 
 
 
 
  Equity Share Allotment A/c (27,000 × 10)
Dr.
 
2,70,000
 
    To Equity Share Capital A/c
 
 
 
2,70,000
  (Allotment money due)
 
 
 
 
   
 
 
 
 
  Bank A/c
Dr.
 
94,000
 
  Calls in Advance A/c
 
 
2,00,000
 
    To Equity Share Allotment A/c
 
 
 
2,70,000
    To Calls–in–Advance A/c
 
 
 
24,000
  (Allotment money received)
 
 
 
 
   
 
 
 
 
  Equity Share First Call A/c (27,000 × 40)
Dr.
 
10,80,000
 
    To Equity Share Capital A/c
 
 
 
10,80,000
  (Call money due)
 
 
 
 
   
 
 
 
 
  Bank A/c
Dr.
 
6,26,500
 
  Calls–in–Advance A/c
Dr.
 
4,50,000
 
  Calls–in–Arrears A/c
Dr.
 
3,500
 
    To Equity Share First Call A/c
 
 
 
10,80,000
  (Call money received)
 
 
 
 
   
 
 
 
 
  Equity Share Capital A/c
Dr.
 
20,000
 
    To Equity Share First Call A/c
 
 
 
3,500
    To Equity Share Forfeiture A/c
 
 
 
16,500
  (200 shares forfeited)
 
 
 
 
   
 
 
 
 
  Bank A/c (200 × 105)
Dr.
 
21,000
 
    To Equity Share Capital A/c
 
 
 
20,000
    To Securities Premium A/c
 
 
 
1,000
  (Forfeited shares re–issued at Rs 105 per share)
 
 
 
 
   
 
 
 
 
  Equity Share Forfeiture A/c
Dr.
 
16,500
 
    To Capital Reserve A/c
 
 
 
16,500
  (Profit on re–issue transferred)
 
 
 
 

Page No 8.126:

Question 72:

VXN Ltd. invited applications for issuing 50,000 equity shares of  ₹  10 each at a premium of  ₹  8 per share . The amount was payable as follows:
 

 On Application                                                             ₹ 4 per share (Including  ₹ 2 premium);
 On Allotment         ₹  6 per share (Including  ₹  3 premium);
 On First Call         ₹  5 per share (Including  ₹  1  premium); and
 On Second and Final Call        Balance Amount

The issue was fully subscribed . Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal's shares were immediately forfeited after allotment . Afterwards, the first call was made. Krishna, a holder of 100 shares , failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call . Krishna's shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received . All the forfeited shares were reissued at  ₹  9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
  Bank A/c (50,000 × 4)
Dr.
 
2,00,000
 
    To Equity Share Application A/c
 
 
 
2,00,000
  (Application money received on 50,000 shares)
 
 
 
 
   
 
 
 
 
  Equity Share Application A/c
Dr.
 
2,00,000
 
    To Equity Share Capital A/c
 
 
 
1,00,000
    To Securities Premium Reserve A/c
 
 
 
1,00,000
  (Application money transferred to Share Capital)
 
 
 
 
   
 
 
 
 
  Equity Share Allotment A/c (50,000 × 6)
Dr.
 
3,00,000
 
    To Equity Share Capital A/c
 
 
 
1,50,000
    To Securities Premium Reserve A/c
 
 
 
1,50,000
  (Allotment money due on 50,000 shares)
 
 
 
 
   
 
 
 
 
  Bank A/c (49,800 × 6) + (400 × 8)
Dr.
 
3,02,000
 
    To Equity Share Allotment A/c (49,800 × 5)
 
 
 
2,98,800
    To Calls–in–Advance A/c (400 × 8)
 
 
 
3,200
  (Allotment money received)
 
 
 
 
   
 
 
 
 
  Equity Share Capital A/c (200 × 5)
Dr.
 
1,000
 
  Securities Premium Reserve A/c (200 × 3)
Dr.
 
600
 
    To Equity Share Allotment A/c (200 × 6)
 
 
 
1,200
    To Equity Share Forfeiture A/c (200 × 2)
 
 
 
400
  (200 shares forfeited for non–payment of allotment money including premium of Rs 3)
 
 
 
 
   
 
 
 
 
  Equity Share First Call A/c (49,800 × 5)
Dr.
 
2,49,000
 
    To Equity Share Capital A/c
 
 
 
1,99,200
    To Securities Premium Reserve A/c
 
 
 
49,800
  (Call money due on 49,800 shares)
 
 
 
 
   
 
 
 
 
  Bank A/c (49,700 × 5) − 2,000 + 900
Dr.
 
2,47,400
 
  Calls–in–Advance A/c (400 × 5)
Dr.
 
2,000
 
     To Calls–in–Advance A/c (300 × 3)
 
 
 
900
    To Equity Share First Call A/c
 
 
 
2,48,500
  (Call money received)
 
 
 
 
   
 
 
 
 
  Equity Share Capital A/c (100 × 9)
Dr.
 
900
 
  Securities Premium Reserve A/c (100 × 1)
 
 
100
 
    To Equity Share First Call A/c (100 × 5)
 
 
 
500
    To Equity Share Forfeiture A/c (100 × 5)
 
 
 
500
  (100 shares forfeited for non-payment of call money)
 
 
 
 
   
 
 
 
 
  Equity Share Second and Final Call A/c (49,700 × 3)
Dr.
 
1,49,100
 
    To Equity Share Capital A/c
 
 
 
49,700
    To Securities Premium A/c      
99,400
  (Call money due on 49,700 shares)  
 
 
 
 
   
 
 
 
 
  Bank A/c
Dr.
 
1,47,000
 
  Calls-in-Advance A/c (1,200 + 900)
 
 
2,100
 
    To Equity Share Second and Final Call A/c
 
 
 
1,49,100
  (Call money received on shares)
 
 
 
 
   
 
 
 
 
  Bank A/c (300 × 9)
Dr.
 
2,700
 
  Equity Share Forfeiture A/c
 
 
300
 
    To Equity Share Capital A/c
 
 
 
3,000
  (300 shares re–issued at Rs 9 per share)
 
 
 
 
   
 
 
 
 
  Equity Share Forfeiture A/c (400 + 500 − 300)
Dr.
 
600
 
    To Capital Reserve A/c
 
 
 
600
  (Profit on re-issue transferred to Capital Reserve)
 
 
 
 
     
 
 

Page No 8.126:

Question 73:

Sukanya Ltd. invited applications for issuing 1,00,000 equity shares of  ₹  10 each. The shares were issued at  a premium of  ₹  20 per share. The amount was payable as follows:

 On Application and Allotment      ₹ 14 per share (including premium of  ₹  10),
 On First Call     ₹  8 per share (including premium of  ₹  5),
 On Final Call     ₹  8 per share (including premium of  ₹  5).

Applications for 96,000 shares were received. Rohit , a shareholder holding 7,000 shares, failed to pay both the calls and Namit , a holder of 5,000 shares , did not pay the final call.
Shares of Rohit and Namit were forfeited . Of the forfeited shares 8,000 shares including all  the shares of Rohit were reissued to Reena at  ₹  8 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of Sukanya Ltd.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Bank A/c (96,000×14)

Dr.

 

13,44,000

 

 

  To Equity Share Application and Allotment A/c

 

 

 

13,44,000

 

( Application money received)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application and Allotment A/c

Dr.

 

13,44,000

 

 

  To Equity Share Capital A/c (96,000×4)

 

 

 

3,84,000

 

  To Security Premium Reserve A/c (96,000×10)

 

 

 

9,60,000

 

(Application money adjusted to Share Capital)

 

 

 

 

 

 

 

 

 

 

 

 Equity Share First Call A/c (96,000×8)

Dr.

 

7,68,000

 

 

  To Equity Share Capital A/c (96,000×3)

 

 

 

2,88,000

 

  To Security Premium Reserve A/c (96,000×5)

 

 

 

4,80,000

 

(First call money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (7,68,000­­ – 56,000)

Dr.

 

7,12,000

 

 

  To Equity Share First Call A/c

 

 

 

7,12,000

 

(First call money received)

 

 

 

 

 

 

 

 

 

 

 

 Equity Share Second Call A/c (96,000×8)

Dr.

 

7,68,000

 

 

  To Equity Share Capital A/c (96,000×3)

 

 

 

2,88,000

 

    To Security Premium Reserve A/c (96,000×5)

 

 

 

4,80,000

 

(Second call money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (7,68,000­­ – 56,000 – 40,000)

Dr.

 

6,72,000

 

 

  To Equity Share Second Call A/c

 

 

 

6,72,000

 

(Second call money received)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

1,20,000

 

 

Security Premium Reserve A/c (7,000×10 + 5,000×5)

Dr.

 

95,000

 

 

      To Equity Share First Call A/c

 

 

 

56,000

 

      To Equity Share Second Call A/c

 

 

 

96,000

 

      To Shares Forfeited A/c (7,000×4 + 5,000×7)

 

 

 

63,000

 

(Shares Forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (8,000×8)

Dr.

 

64,000

 

 

Shares Forfeited A/c (8,000×2)

Dr.

 

16,000

 

 

    To Equity Share Capital A/c

 

 

 

80,000

 

(Shares Reissued)

 

 

 

 

 

 

 

 

 

 

 

Shares Forfeited A/c

Dr.

 

19,000

 

 

    To Capital Reserve A/c

 

 

 

19,000

 

(Profit on Reissue transferred to Capital Reserve A/c)

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Amount transferred to Capital Reserve

Amount forfeited on reissued shares of Rohit = Rs 28,000

Amount forfeited on reissued shares of Namit=Amount  Forfeited×Shares  Re-issued Shares Forfeited             

                                                                                        =35,000×1,0005,000=7,000 

Total amount forfeited on reissued shares = 28,000 + 7,000 = Rs 35,000

Amount transferred to Capital Reserve =  35,000 – 16,000 = Rs 19,000



Page No 8.127:

Question 74:

Alfa Ltd. invited applications for issuing 75,000 equity shares of  ₹  10 each. The amount was payable as follows:

 On application and allotment      ₹ 4 per share ,
 On first Call     ₹  3 per share,
 On  second and final Call     balance.

Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due  on first call. Vibha who was allotted 750 shares failed to pay the first call . Her shares were immediately forfeited . Afterwards the second call was made. The amount due on second call was also received except on 1,000 shares applied by Monika . Her shares were also forfeited. All the forefited shares were reissued to Mohit for ₹9,000 as fully paid-up.
Pass necessary journal entries in the Books of Alfa Ltd . for the above transactions.

Answer:

In the books of Alfa Ltd.

Journal Entry

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

4,00,000

 

 

  To Equity Share Application and Allotment A/c

 

 

 

4,00,000

 

(Application money received on 1,00,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application and Allotment A/c

Dr.

 

4,00,000

 

 

  To Equity Share Capital A/c

 

 

 

3,00,000

 

  To Equity Share First Call A/c

 

 

 

1,00,000

 

(Application money transferred to share capital account and excess money is adjusted in first call account)

 

 

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

2,25,000

 

 

To Equity Share Capital A/c

 

 

 

2,25,000

 

(Amount due on first call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,25,000 – 1,00,000 – 1,250)

Dr.

 

1,23,750

 

 

  To Equity Share First Call A/c

 

 

 

1,23,750

 

(Amount received on first call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

5,250

 

 

  To Equity Share Forfeiture A/c

 

 

 

4,000

 

  To Equity Share First Call A/c

 

 

 

1,250

 

(Vibha’s shares were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Second and Final Call A/c

Dr.

 

2,22,750

 

 

To Equity Share Capital A/c

 

 

 

2,22,750

 

(Amount due on second and final call after forfeiting Vibha’s shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,22,750 – 2,250)

Dr.

 

2,20,500

 

 

  To Equity Share Second and Final Call A/c

 

 

 

2,20,500

 

(Amount received on second and final call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

7,500

 

 

  To Equity Share Forfeiture A/c

 

 

 

5,250

 

  To Equity Share Second and Final Call A/c

 

 

 

2,250

 

(Monika’s shares were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,000

 

 

Equity Share Forfeiture A/c

Dr.

 

6,000

 

 

To Equity Share Capital A/c

 

 

 

15,000

 

(Forfeited shares were reissued for Rs 9,000 as fully paid-up)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c

Dr.

 

3,250

 

 

To Capital Reserve A/c

 

 

 

3,250

 

(Excess amount on forfeiture is transferred to capital reserve)

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of Amount not received on First Call

WN2: Calculation of Amount not received on Second Call

Page No 8.127:

Question 75:

Himalaya Company Limited issued for public subscription  1,20,000 equity shares of ₹  10 each at a premium for ₹  2 per share payable as under:

 With Application          ₹ 3 per share,
 On allotment (including premium)         ₹  5 per share,
 On First call         ₹  2 per share 
 On Second and Final call         ₹  2 per share.

Applications were received for 1,60,000 shares . Allotment was made on pro rata basis . Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited  after the second call was made . All the shares forfeited were reissued to Teena as fully paid at ₹  7 per share.
Record journal entries and show the transactions relating to share capital in the company's Balance Sheet. 

Answer:

Books of Himalaya Company Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
  Bank A/c
Dr.
 
4,80,000
 
  To Share Application A/c    
4,80,000
  (Share Application money received for 1,60,000 shares @ Rs 3 per share)      
         
  Share Application A/c
Dr.
 
4,80,000
 
  To Equity Share Capital A/c    
3,60,000
  To Share Allotment A/c    
1,20,000
  (Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)      
         
  Share Allotment A/c
Dr.
 
6,00,000
 
  To Equity Share Capital A/c    
3,60,000
  To Securities Premium    
2,40,000
  (Share Allotment due on 1,20,000 shares @ Rs 5 per share including Rs 2 Securities Premium)      
         
  Bank A/c
Dr.
 
4,80,000
 
  To Share Allotment A/c    
4,80,000
  (Share allotment for 1,20,000 shares @ Rs 5 per share received)      
         
  Share First Call A/c
Dr.
 
2,40,000
 
  To Equity Share Capital A/c    
2,40,000
  (Share First Call due on 1,20,000 shares @ Rs 2 per share)      
         
  Bank A/c
Dr.
 
2,30,400
 
  To Share First Call A/c    
2,30,400
  (Share First Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)      
         
  Share Final Call A/c
Dr.
 
2,40,000
 
  To Equity Share Capital A/c    
2,40,000
  (Share Final call due on 1,20,000 shares @ Rs 2 per share)      
         
  Bank A/c
Dr.
 
2,30,400
 
  To Share Final Call A/c    
2,30,400
  (Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)      
         
  Equity Share Capital A/c (4,800×10)
Dr.
 
48,000
 
  To  Share First Call A/c (4,800×2)      
9,600
  To  Share Final Call A/c (4,800×2)      
9,600
  To  Share Forfeiture A/c (4,800×6)      
28,800
  (4,800 shares forfeited for the non–payment of First Call and Final Call)      
           
  Bank A/c
Dr.
 
33,600
 
  Share Forfeiture A/c
Dr.
 
14,400
 
  To  Equity Share Capital      
48,000
  (4,800 shares reissued @ Rs 7 per share, fully paid–up)      
           
  Share Forfeiture A/c
Dr.
 
14,400
 
  To Capital Reserve A/c      
14,400
  (Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)        
           
 
Himalaya Company Limited
Balance Sheet
Particulars
Note No.
Amount 
(₹)
I. Equity and Liabilities    
1. Shareholders’ Funds
   
a. Share Capital
1
12,00,000
b. Reserves and Surplus
2
2,54,400
2. Non-Current Liabilities
   
3. Current Liabilities
   
Total
 
14,54,400
     
II. Assets    
1. Non-Current Assets
   
2. Current Assets
   
a. Cash and Cash Equivalents
3
14,54,400
Total
 
14,54,400
     

NOTES TO ACCOUNTS
Note No.
Particulars
Amount
(₹)
1
Share Capital  
  Authorised Share Capital  
  …….. shares of Rs 10 each
  Issued Share Capital  
  1,20,000 shares of Rs 10 each
12,00,000
  Subscribed, Called-up and Paid-up Share Capital  
  1,20,000 shares of Rs 10 each
12,00,000
     
2
Reserves and Surplus  
  Securities Premium
2,40,000
 
  Capital Reserve
14,400
2,54,400
     
3
Cash and Cash Equivalents  
  Cash at Bank
14,54,400
     

Page No 8.127:

Question 76:

H Limited issued a prospectus inviting applications for 20,000 shares of ₹ 10 each  at a  premium of ₹ 2 per share payable as follows:
On application ₹ 2 ; on allotment  ₹ 5 (including premium) ; on first call ₹ 3 ; on second and final call ₹ 2.
 
Applications were received for 30,000 shares  and pro rata allotment was made on the applications for 24,000 shares. Money overpaid on applications was adjusted against amount due on allotment.

Ramesh, to whom 400 shares were allotted , failed to pay the allotment money and on his subsequent failure to pay first call his shares were forfeited . Mohan , the holder of 600 shares, failed to pay two calls  and  his shares were forfeited  after the second call.

Of the shares forfeited, 800 shares were sold to Krishna credited as fully paid-up for ₹ 9 per share, the whole of Ramesh's shares being included .
Pass journal entries and prepare the Balance Sheet.
 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Bank A/c (30,000×2)

Dr.

 

60,000

 

 

  To Share Application A/c

 

 

 

60,000

 

(Application money received)

 

 

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

60,000

 

 

  To Share Capital A/c (20,000×2)

 

 

 

40,000

 

  To Share Allotment A/c (4,000×2)

 

 

 

8,000

 

  To Bank A/c  (6,000×2)

 

 

 

12,000

 

(Application money adjusted to share capital carried to allotment and also refunded)

 

 

 

 

 

 

 

 

 

 

 

Share Allotment A/c (20,000×5)

Dr.

 

1,00,000

 

 

  To Share Capital A/c (20,000×3)

 

 

 

60,000

 

  To Securities Premium Reserve A/c (20,000×2)

 

 

 

40,000

 

(Allotment money due along with premium)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

90,160

 

 

  To Share Allotment A/c (1,00,000–8,000–1,840)

 

 

 

90,160

 

(Allotment money received)

 

 

 

 

 

 

 

 

 

 

 

Share First Call A/c (20,000×3)

Dr.

 

60,000

 

 

  To Share Capital A/c

 

 

 

60,000

 

(First call money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (19,000×3)

Dr.

 

57,000

 

 

  To Share First Call A/c

 

 

 

57,000

 

(Call money received)

 

 

 

 

 

 

 

 

 

 

 

Share Capital A/c (400×8)

Dr.

 

3,200

 

 

Securities Premium Reserve A/c (400×2)

Dr.

 

800

 

 

  To Share Allotment A/c

 

 

 

1,840

 

  To Share First Call A/c (400×3)

 

 

 

1,200

 

  To Share Forfeiture A/c (480×2)

 

 

 

960

 

(400 share forfeited for non-payment of allotment and first call money)

 

 

 

 

 

 

 

 

 

 

 

Share Second & Final Call A/c (19,600×2)

Dr.

 

39,200

 

 

  To Share Capital A/c

 

 

 

39,200

 

(Second call money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

38,000

 

 

  To Share Second & Final Call A/c (19,000 ×2)

 

 

 

38,000

 

(Second call money received)

 

 

 

 

 

 

 

 

 

 

 

Share Capital A/c (600×10)

Dr.

 

6,000

 

 

  To Share First Call A/c (600×3)

 

 

 

1,800

 

  To Share Second & Final Call A/c (600×2)

 

 

 

1,200

 

  To Share Forfeiture A/c (600×5)

 

 

 

3,000

 

(600 shares forfeited for non-payment of first call and second call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (800×9)

Dr.

 

7,200

 

 

Share Forfeiture A/c (800×1)

Dr.

 

800

 

 

  To Share Capital A/c (800×10)

 

 

 

8,000

 

(800 shares reissued @ Rs 9 per share)

 

 

 

 

 

 

 

 

 

 

 

 Share Forfeiture A/c

Dr.

 

2,160

 

 

  To Capital Reserve A/c

 

 

 

2,160

 

( Profit on reissue transferred  to Capital Reserve)

 

 

 

 

 

 

 

 

 

 

Balance Sheet of H Ltd

Particulars

Note No.

Amount

(Rs)

1. Equity and Liabilities

 

 

Shareholders’ Funds

 

 

a. Share Capital

1

1,99,000

b. Reserves and Surplus

2

41,360

 

 

 

Total

 

2,40,360

2. Assets

 

 

Current Assets

 

 

a. Cash and Cash Equivalents

3

2,40,360

Total

 

2,40,360

 

 

 

 

Notes to Accounts

 

Particulars

Amount

(Rs)

1. Share Capital

 

Issued Share Capital

 

20,000 Shares of Rs 10 each

2,00,000

Subscribed, Called-up & Paid-up Share Capital

 

19,800 Shares of Rs 10 each

1,98,000

 

Add: Share Forfeited (200×5)

1,000

1,99,000

 

 

2. Reserves and Surplus

 

Securities Premium Reserve (19,600×2)

39,200

Capital Reserve

2,160

 

41,360

3. Cash and Cash Equivalents

 

Bank

2,40,360

 

 

       

Working Notes:

WN1 Calculation of Amount Received on Allotment

WN2  Calculation of Share Forfeiture transferred to Capital Reserve



Page No 8.128:

Question 77:

 Dogra Ltd. had an authorised capital of ₹ 1,00,00,000 divided into Equity Shares of ₹ 100 each. The company offered 84,000 shares to the public at premium.
The amount was payable as follow:
 

       On Application     ₹ 30 per share,
       On Allotment     ₹ 40 per share(including premium),
       On First and Final call     ₹ 50 per share.
 

Applications were received for 80,000 shares.
All sums were duly  received except the following:
   Lakhan, a holder of 200 shares did not pay allotment and call money.
   Paras, a holder of 400 shares did not pay call money.
The company, forfeited the shares of Lakhan and Paras. Subsequently the forfeited shares were reissued  for ₹  80 per share as fully paid-up . Show the entries for the above transactions in the Cash Book and journal of the company

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

 

 

 

 

 

 

Equity Share Application  A/c (80,000×30)

Dr.

 

24,00,000

 

 

  To Equity Share Capital A/c

 

 

 

24,00,000

 

(Application money transferred to share capital)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c (80,000×40)

Dr.

 

32,00,000

 

 

  To Equity Share Capital A/c (80,000×20)

 

 

 

16,00,000

 

  To Securities Premium Reserve A/c (80,000×20)

 

 

 

16,00,000

 

(Allotment money due)

 

 

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c (80,000×50)

Dr.

 

40,00,000

 

 

  To Equity Share Capital A/c

 

 

 

40,00,000

 

(First call money due)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c (600×100)

Dr.

 

60,000

 

 

Securities Premium Reserve A/c (200×20)

Dr.

 

4,000

 

 

  To Equity Share Allotment A/c (200×40)

 

 

 

8,000

 

  To Equity Share First and Final Call (600×50)

 

 

 

30,000

 

  To Equity Share Forfeiture A/c (200×30 + 400×50)

 

 

 

26,000

 

(600 shares forfeited for non-payment of allotment and call money)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c (600×20)

Dr.

 

12,000

 

 

  To Equity Share Capital A/c

 

 

 

12,000

 

(600 shares reissued)

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c                                               Dr.

 

14,000

 

 

  To Capital Reserve A/c

 

 

14,000

 

(Profit on reissue transferred to capital reserve)

 

 

 

 

Cash Book

Dr.

Cr.

Date

Particulars

L.F.

Amount

(Rs)

Date

Particulars

L.F.

Amount

(Rs)

 

Equity Share Application A/c (80,000×30)

 

24,00,000

 

Balance c/d

 

96,10,000

 

Equity Share Allotment A/c (79,800×40)

 

31,92,000

 

 

 

 

 

Equity Share First Call  A/c (79,400×50)

 

39,70,000

 

 

 

 

 

Equity Share Capital A/c (600×80)

 

48,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96,10,000

 

 

 

96,10,000

 

 

 

 

 

 

 

 

Page No 8.128:

Question 78:

Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of ₹ 10 each at a premium  of   ₹ 2 per share. The amount was payable as follows:

       On application     ₹ 2 per share,
       On allotment     ₹ 5 per share(including premium),
       On first and final call     Balance.
 

Applications for 1,50,000  shares were received . Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment . All calls were made. Manu who had applied for 3,000 shares failed to pay the amount  due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call . Shares of both Manu and Madhur  were forfeited . The forfeited shares were reissued at  ₹ 9 per share as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.
 

Answer:

In the books of Jeevan Dhara Ltd.

Journal Entry

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

3,00,000

 

 

  To Equity Share Application A/c

 

 

 

3,00,000

 

(Application money received on 1,50,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

3,00,000

 

 

  To Equity Share Capital A/c

 

 

 

2,40,000

 

  To Equity Share Allotment A/c

 

 

 

60,000

 

(Amount of application transferred to Share Capital and excess money is adjusted towards allotment)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

6,00,000

 

 

To Equity Share Capital A/c

 

 

 

3,60,000

 

To Securities Premium A/c

 

 

 

2,40,000

 

(Amount due on allotment)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

5,29,200

 

 

To Equity Share Allotment A/c

 

 

 

5,29,200

 

(Amount received on share allotment)

 

 

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

6,00,000

 

 

To Equity Share Capital A/c

 

 

 

6,00,000

 

(Amount due on first and final call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

5,76,000

 

 

  To Equity Share First and Final Call A/c

 

 

 

5,76,000

 

(Amount received on first and final call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

48,000

 

 

Securities Premium A/c

Dr.

 

4,800

 

 

  To Equity Share Forfeiture A/c

 

 

 

18,000

 

To Equity Share Allotment A/c

 

 

 

10,800

 

  To Equity Share First and Final Call A/c

 

 

 

24,000

 

(Shares of Manu and Madhur were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

43,200

 

 

Equity Share Forfeiture A/c

Dr.

 

4,800

 

 

To Equity Share Capital A/c

 

 

 

48,000

 

(Forfeited shares were reissued for Rs 9 as fully paid-up)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c

Dr.

 

13,200

 

 

To Capital Reserve A/c

 

 

 

13,200

 

(Excess amount on forfeiture is transferred to capital reserve)

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of Amount not received on Allotment and First and Final Call

WN2: Calculation of amount not received from Madhur

Page No 8.128:

Question 79:

JJK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows:

       On Application     ₹ 2 per share,
       On Allotment     ₹ 4 per share; and
       On First and Final call     
Balance Amount.
 

The issue was oversubscribed three times. Applications for 30%  shares were rejected and money refunded .Allotment was made to the remaining applicants as follows:
       Category  No . of Shares Applied  No. of Shares Allotted
       I     80,000    40,000
      II     25,000
  10,000
 

 Excess money  paid by the applicants who were allotted shares was adjusted towards sums due on allotment .
Deepak, a shareholder belonging  to Category I , who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment . Afterwards, first and final call was made and was duly received . The forfeited shares of Deepak and Raju were reissued at ₹11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of company.

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
  Bank A/c (1,50,000 × 2)
Dr.
 
3,00,000
 
    To Share Application A/c
 
 
 
3,00,000
  (Application money received on 1,50,000 shares)
 
 
 
 
   
 
 
 
 
  Share Application A/c
Dr.
 
3,00,000
 
    To Share Capital A/c
 
 
 
1,00,000
     To Share Allotment A/c
 
 
 
1,10,000
     To Bank A/c
 
   
90,000
  (Application money transferred to Share Capital)
 
 
 
 
   
 
 
 
 
  Share Allotment A/c (50,000 × 4)
 
 
2,00,000
 
    To Share Capital A/c
 
 
 
2,00,000
  (Allotment money due on 50,000 shares)
 
 
 
 
   
 
 
 
 
  Bank A/c
Dr.
 
88,900
 
    To Share Allotment A/c (WN2)
 
 
 
88,900
  (Allotment money received)
 
 
 
 
   
 
 
 
 
  Share Capital A/c (600 × 6)
Dr.
 
3,600
 
     To Share Allotment A/c (1,000 + 100)
 
   
1,100
     To Share Forfeiture A/c (2,000 + 500)
 
   
2,500
  (600 shares forfeited for non–payment of allotment money)
 
     
           
  Share First and Final Call A/c
Dr.
 
1,97,600
 
     To Share Capital A/c
 
   
1,97,600
  (Call money due on 49,400 shares)
 
     
   
 
 
 
 
  Bank A/c
Dr.
 
1,97,600
 
    To Share First and Final Call A/c
 
 
 
1,97,600
  (Call money received)
 
 
 
 
   
 
 
 
 
  Bank A/c (600 × 11)
Dr.
 
6,600
 
  To Share Capital A/c
 
 
 
6,000
    To Security Premium Reserve A/c
 
 
 
600
  (600 shares re–issued at Rs 11 per share)
 
 
 
 
   
 
 
 
 
  Share Forfeiture A/c
Dr.
 
2,500
 
    To Capital Reserve A/c
 
 
 
2,500
  (Profit on re–issue transferred to Capital Reserve)
 
 
 
 
     
 
 

Working Notes:

WN1:Computation Table
 
Categories
Shares Applied
 
Shares Allotted
 
Money received on Application 
@ Rs 2 each 
Money transferred to Share Capital
@ Rs 2 each
Excess Application Money
Amount adjusted on Allotment 
 
Money refunded
I
80,000
40,000
1,60,000
80,000
80,000
80,000
II
25,000
10,000
50,000
20,000
30,000
30,000
III
45,000
90,000
90,000
 
1,50,000
50,000
3,00,000
1,00,000
1,10,000
1,10,000
90,000
 
 
 
 
 
 
 
 

WN2:Calculation of Amount Received on Allotment
 
Amount Due on Allotment
2,00,000
  Less: Excess Received
1,10,000
Balance to be Received
90,000
  Less: Amount not paid by Deepak
(1,000)
  Less: Amount not paid by Raju
(100)
Amount received on Allotment
88,900

WN3: Calculation of Shares Applied/Allotted

Shares Allotted to Deepak=40,00080,000×1,000=500Shares Applied by Raju=25,00010,000×100=250
 
Amount not paid by Deepak on Allotment
Amount received on Application
2,000
  Less: Transferred to Share Capital
(1,000)
Excess received on Application
1,000
Amount due on allotment
2,000
  Less: Excess adjustment
(1,000)
Amount unpaid by Deepak
1,000
 
Amount not paid by Raju on Allotment
Amount received on Application
500
  Less:  Transferred to Share Capital
(200)
Excess received on Application
300
Amount due on allotment
400
  Less: Excess adjustment
(300)
Amount unpaid by Raju
100



Page No 8.129:

Question 80:

Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of ₹ 10 each at a premium  of ₹ 3 per share. The amount was payable as follows:

       On application     ₹ 6 per share(including premium ₹1);
       On allotment     ₹ 3 per share(including premium ₹ 1); and
       The balance     on First and Final call.
 

Applications for 1,80,000  shares were received .Applications for 10,000  shares were rejected and pro rata allotment was made to the remaining applicants.Over payment received on application was adjusted towards sums due on allotment . All calls were made and were duly received except allotment and final call from Aditya who was  allotted 3,200 shares. His shares were forfeited . Half of the forfeited shares were reissued for ₹ 43,000  as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Nitro Paints Ltd.

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
  Bank A/c (1,80,000 × 6)
Dr.
 
10,80,000
 
    To Equity Share Application A/c
 
 
 
10,80,000
  (Application money received)
 
 
 
 
   
 
 
 
 
  Equity Share Application A/c
Dr.
 
10,80,000
 
    To Equity Share Capital A/c(1,60,000 × 5)
 
 
 
8,00,000
    To Securities Premium Reserve A/c (1,60,000 × 1)
 
 
 
1,60,000
    To Share Allotment A/c(10,000 × 6)
 
 
 
60,000
    To Bank A/c (10,000 × 6)
 
 
 
60,000
  (Application money transferred)
 
 
 
 
   
 
 
 
 
  Equity Share Allotment A/c (1,60,000 × 3)
Dr.
 
4,80,000
 
    To Equity Share Capital A/c(1,60,000 × 2)
 
 
 
3,20,000
    To Securities Premium Reserve A/c(1,60,000 × 1)
 
 
 
1,60,000
  (Allotment money due)
 
 
 
 
   
 
 
 
 
  Bank A/c (4,80,000 ─ 60,000 ─ 8,400)
Dr.
 
4,11,600
 
    To Equity Share Allotment A/c
 
 
 
4,11,600
  (Allotment money received)
 
 
 
 
   
 
 
 
 
  Equity Share First Call A/c (1,60,000 × 4)
Dr.
 
6,40,000
 
    To Equity Share Capital A/c
 
 
 
4,80,000
    To Securities Premium Reserve A/c
 
 
 
1,60,000
  (Call money due)
 
 
 
 
   
 
 
 
 
  Bank A/c
Dr.
 
6,27,200
 
    To Equity Share First Call A/c
 
 
 
6,27,200
  (Call money received)
 
 
 
 
   
 
 
 
 
  Equity Share Capital A/c (3,200 × 10)
Dr.
 
32,000
 
  Securities Premium Reserve A/c (3,200 × 2)
Dr.
 
6,400
 
    To Equity Share Allotment A/c
 
 
 
8,400
     To Equity Share First & Final Call A/c
 
 
 
12,800
    To Equity Share Forfeiture A/c
 
 
 
17,200
  (3,200 shares forfeited)
 
 
 
 
   
 
 
 
 
  Bank A/c
Dr.
 
43,000
 
    To Equity Share Capital A/c
 
 
 
16,000
    To Securities Premium A/c
 
 
 
27,000
  (1,600 shares re–issued)
 
 
 
 
   
 
 
 
 
  Equity Share Forfeiture A/c
Dr.
 
8,600
 
    To Capital Reserve A/c
 
 
 
8,600
  (Profit on re-issue transferred)
 
 
 
 
     
 
 

Working Notes:
Shares Applied by Aditya=1,70,0001,60,000×3,200=3,400
 
Amount unpaid by Aditya on Allotment
Application money received
20,400
  Less: Transferred to Share Capital
(19,200)
Excess received on Application
1,200
Allotment money due
9,600
  Less: Excess adjustment
(1,200)
Amount unpaid by Aditya
8,400

Page No 8.129:

Question 81:

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

On application                                        ₹ 3 per share,
On allotment                                           ₹ 5 per share,
On first and final call                              Balance.

Applications for 70,000 shares were received . Allotment was made to all applicants on pro rata basis. Excess money received on application was adjusted towards sums due on allotment . Ramesh, who had applied for 700 shares , did not pay the allotment money and on his failure to pay the allotment money his shares were forfeited. Afterwards , the first and the final call was made . Adhar, who had been allotted 500 shares, did not pay the first and final call . His shares were also forfeited . Out of the forfeited shares 900 shares were reissued at ₹ 8 per share as fully paid-up . The reissued shares included all the  shares of Ramesh.
Pass necessary journal entries for the above  transactions in the books of the company. 

Answer:

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

Bank A/c (3×70,000)

Dr.

 

2,10,000

 

 

To Equity Share Application A/c

 

 

 

2,10,000

 

(Application money on 70,000 shares received)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

2,10,000

 

 

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

 

 

 

1,50,000

 

To Equity Share Allotment A/c (WN2)

 

 

 

60,000

 

(Share Application money on 50,000 shares transferred to share capital account and excess was utilised on allotment)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

2,50,000

 

 

To Equity Share Capital A/c

 

 

 

2,50,000

 

(Allotment money due on allotment)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (WN2)

Dr.

 

1,88,100

 

 

To Equity Share Allotment A/c

 

 

 

1,88,100

 

(Allotment money received on 49,500 shares and Rs 60,000 excess money adjusted)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

4,000

 

 

   To Equity Share Allotment A/c(WN1)

 

 

 

1,900

 

   To Equity Share Forfeiture A/c(WN1)

 

 

 

2,100

 

(500 shares forfeited for non payment of allotment money

 

 

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

99,000

 

 

To Equity Share Capital A/c

 

 

 

99,000

 

(Share Call money due)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

98,000

 

 

   To Equity Share First and Final Call A/c

 

 

 

98,000

 

(Call money received on 49,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

5,000

 

 

   To Equity Share First and Final Call A/c

 

 

 

1,000

 

   To Equity Share Forfeiture A/c (8×500)

 

 

 

4,000

 

(500 shares forfeited for non payment of Call money)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

7,200

 

 

Equity Share Forfeiture A/c

Dr.

 

1,800

 

 

   To Equity Share Capital

 

 

 

9,000

 

(900 shares reissued at Rs 8 per share)

 

 

 

 

 

(Share call money received and Calls-in-Advance money adjusted)

 

 

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c (WN3)

Dr.

 

3,500

 

 

   To Capital Reserve A/c

 

 

 

3,500

 

(Profit on forfeiture of shares transferred)

 

 

 

 

 

 

 

 

 

 

Working Note:

Page No 8.129:

Question 82:

XYZ Ltd . is registered with an authorised capital of ₹ 2,00,000 divided into 2,000 shares of ₹ 100 each of which , 1,000 shares were offered for public subscription at a premium of ₹ 5 per share , payable as:
 

    On application             ₹ 10 per share,
    On allotment             ₹ 25 per share (including premium),
    On first call             ₹ 40 per share
    On final call             ₹ 30 per share

Applications were received for 1,800 shares, of which applications for 300 shares were rejected outright; the rest of the application were allotted 1,000 shares on pro rata basis. Excess application money was transferred to allotment.
All the money was duly received except from Sundar , holder of 100 shares, who failed  to pay allotment and first call money. His shares were later forfeited and reissued to Shyam at ₹ 60 per share ₹ 70 paid-up. Final call has not been made.
Pass necessary Journal entries and prepare Cash Book in the books of XYZ Limited.

Answer:

Authorised capital 2,000 shares of Rs 100 each.

Issued 1,000 shares of Rs 100 each at premium of Rs 5

Applied 1,800 shares

Allotment made as:

 

Amount payable per shares as:

 

Applied

 

Allotted

 

Application

Rs 10

 

1,500

 

1,000

 

Allotment

Rs 25

(20 + 5)

300

 

NIL

 

First Call

Rs 40

 

 

 

 

 

 

Rs 75

Called-up

 

 

 

 

Final Call

Rs 30

 

1,800

 

1,000

 

 

Rs 105

 

 

Books of XYZ Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Application A/c

Dr.

 

15,000

 

 

To Share Capital A/c

 

 

10,000

 

To Share Allotment A/c

 

 

5,000

 

(Share application of 1,000 shares transferred to Share Capital, Rs 5,000 adjusted on allotment)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

25,000

 

 

To Share Capital A/c

 

 

20,000

 

To Securities Premium A/c

 

 

5,000

 

(Share allotment due on 1,000 shares at Rs 25 each including Rs 5 premium)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

40,000

 

 

To Share Capital A/c

 

 

40,000

 

(First call due on 1,000 shares at Rs 40 each)

 

 

 

 

 

 

 

 

 

Securities Premium A/c

Dr.

 

500

 

 

Share Capital A/c

Dr.

 

7,000

 

 

To Share Forfeiture A/c

 

 

1,500

 

To Share Allotment A/c

 

 

2,000

 

To Share First Call A/c

 

 

4,000

 

(100 shares of Rs 100 each Rs 70 called–up, forfeited for the non-payment of allotment and first call)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

1,000

 

 

To Share Capital A/c

 

 

1,000

 

(100 shares of Rs 100 each re-issued at Rs 60 per share, Rs 70 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Capital Reserve A/c

 

 

500

 

(Balance in Share Forfeiture after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

 

Cash Book

Dr.

 

Cr.

Date

Particulars

Bank

Rs

Date

Particulars

Bank

Rs

 

 

 

 

 

 

 

Share Application

18,000

 

Share Application

3,000

 

Share Allotment

18,000

 

 

 

 

Share First Call

36,000

 

 

 

 

Share Capital

6,000

 

Balance c/d

75,000

 

 

78,000

 

 

78,000

 

 

 

 

 

 

 

Working Notes:

Number of share applied by Sunder

=

 

=

150 shares

Sunder 

Money received on application 150 × Rs 10

=

1,500

Money transferred to Share Capital 100 × Rs 10

=

1,000

Excess Money on application

 

500

 

Share allotment due 100 × Rs 25

=

2,500

Less: Excess money on application

=

500

Calls-in-Arrears on Allotment

 

2,000

Allotment

Allotment due on all shares 1,000 × Rs 25

=

25,000

Less: Adjustment of excess money on application

=

5,000

 

 

20,000

Less: Calls-in-Arrears by Sunder

=

2,000

Money received on allotment

=

18,000

Capital Reserve

Share Forfeiture

Cr.

1,500

Less: Share Forfeiture

Dr.

1,000

Balance in Share Forfeiture after reissue

 

500

Capital Reserve = Balance in Share Forfeiture after re-issue

= Rs 500

 



Page No 8.130:

Question 83:

Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹10 each at a premium of ₹ 3 per share payable as follows:

     With application           
    ₹2,    
     On allotment (including premium)            ₹5, 
     On first call            ₹3,
     On second call            ₹3.

Applications were received for 30,000 shares and allotment was made on pro rata basis. Money overpaid on application s was adjusted to the amount due on allotment. 
Mr Mohit whom 400 shares were allotted , failed to pay the allotment money and the first call , and his shares were forfeited after the first call . Mr Joly, whom 600 shares were allotted , failed to pay for the two calls and hence, his shares were forfeited .
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for  ₹ 9 per share , the whole of Mr Mohit's  shares being included.

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  Bank A/c
Dr.
 
60,000
 
    To Share Application A/c    
60,000
  (Application money received on 30,000 shares @ Rs 2 per share)      
           
  Share Application A/c
Dr.
 
60,000
 
    To Share Capital A/c      
40,000
    To Share Allotment A/c    
20,000
  (Application money received transferred to Share Capital and adjusted on allotment)      
           
  Share Allotment A/c
Dr.
 
1,00,000
 
    To Share Capital A/c    
40,000
    To Securities Premium A/c    
60,000
  (Allotment money due on 20,000 shares @ Rs 5 per share including premium of Rs 3 per share)      
           
  Bank A/c (1,00,000 – 20,000 – 1,600)
Dr.
 
78,400
 
    To Share Allotment A/c    
78,400
  (Allotment money received)      
           
  Share First Call A/c
Dr.
 
60,000
 
    To Share Capital A/c      
60,000
  (Share First Call due on 20,000 shares @ Rs 3 per share)      
           
  Bank A/c (60,000 – 1,200 – 1,800)
Dr.
 
57,000
 
    To Share First Call A/c    
57,000
  (First call money received)      
  Share Capital A/c
Dr.
 
2,800
 
  Share Premium A/c
Dr.
 
1,200
 
    To Share Forfeiture A/c    
1,200
    To Share Allotment A/c    
1,600
    To Share First Call A/c    
1,200
  (400 shares forfeited)        
           
  Share Second Call A/c
Dr.
 
58,800
 
    To Share Capital A/c    
58,800
  (Final Call money due on 19,600 shares @ 3 per share)        
           
  Bank A/c (58,800 – 1,800)
Dr.
 
57,000
 
    To Share Second Call A/c    
57,000
  (Second Call money received)        
           
  Share Capital A/c
Dr.
 
6,000
 
    To Share Forfeiture A/c    
2,400
    To Share First Call A/c    
1,800
    To Share Second Call A/c    
1,800
  (600 shares forfeited)        
           
  Bank A/c
Dr.
 
7,200
 
  Share Forfeiture A/c
Dr.
 
800
 
    To Share Capital A/c    
8,000
  (800 shares reissued @ Rs 9 each)      
           
  Share Forfeiture A/c
Dr.
 
2,000
 
    To Capital Reserve    
2,000
 
(Profit on re–issue transferred to Capital Reserve)
 
 
 
           
 
Balance Sheet
Particulars
Note No.
Amount 
(₹)
I. Equity and Liabilities    
1. Shareholders’ Fund
   
a. Share Capital
1
1,98,800
b. Reserves and Surplus
2
60,800
2. Non-Current Liabilities
   
3. Current Liabilities
   
Total
 
2,59,600
     
II. Assets    
1. Non-Current Assets
   
2. Current Assets
   
a. Cash and Cash Equivalents
3
2,59,600
Total
 
2,59,600
     

NOTES TO ACCOUNTS
Note No.
Particulars
Amount
1
Share Capital  
  Authorised Share Capital  
  …….. shares of Rs 10 each
  Issued Share Capital  
  20,000 shares of Rs 10 each
2,00,000
  Subscribed, Called–up and Paid–up Share Capital  
  19,800 shares of Rs 10 each
1,98,000
 
    Add: Share Forfeiture (200 × 4)
800
1,98,800
     
2
Reserves and Surplus  
  Securities Premium
58,800
 
  Capital Reserve
2,000
60,800
     
3
Cash and Cash Equivalents  
  Cash at Bank
2,59,600
     

Working Notes:

WN1: Calculation of unpaid amount on allotment by Mohit

Shares Applied by Mohit=30,00020,000×400=600

 
Money received on Application (600×2)
1,200
  Less: Adjusted on application (400×2)
(800)
Excess amount received  
400
 
Amount due on Allotment (400×5)
2,000
  Less: Excess amount received  
(400)
Amount unpaid on allotment  
1,600

WN2: Calculation of Amount to be transferred to Capital Reserve
 
Amount forfeited on Mohit’s 400 shares(600×2)
1,200
Amount forfeited on Joly’s 400 shares (400 × 4)
1,600
Total Credit Balance in Share Forfeiture
2,800
  Less: Discount allowed on 800 shares reissued
(800)
Amount to be transferred to Capital Reserve
2,000
   

Page No 8.130:

Question 84:

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 @₹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.

Answer:

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 = = 1,600 shares

Money received on Application 1,600 shares × Rs 3

=

Rs 4,800

Money adjusted on Application 1,200 Shares × Rs 3

=

Rs 3,600

Excess on Application

 

Rs 1,200

 

Allotment due on 1,200 shares × Rs 4

=

4,800

Less: Excess money on Application

=

1,200

Calls-in-Arrears on Allotment

 

3,600

 

Share Allotment

Share Allotment due 50,000 shares × Rs 4

=

2,00,000

Less: Excess money on application

=

75,000

 

 

1,25,000

Less: Calls-in-Arrears on Allotment

=

3,600

Money received on Allotment

=

1,21,400

Shamu’s Shares

Number of shares allotted to Shamu

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

 

Page No 8.130:

Question 85:

A company issued for public subscription 40,000 Equity Shares of ₹ 10 each at a premium of  ₹  2 per share payable as:

       On application     ₹ 2 per share,
       On allotment     ₹ 2 per share,
       On second and final call     ₹ 3 per share.

Applications were received for 60,000 shares . Allotment was made on pro rata basis to the applicants for 48,000 shares, the remaining applications being refused . Money overpaid on application was utilised towards sums due on allotment . Ram to whom  1,600 shares were allotted failed to pay the allotment money and Shyam to whom 2,000 shares were allotted failed to pay the two calls. These shares were subsequently forfeited after the second and final call was made . All the forfeited shares were reissued as fully paid-up @ ₹  8 per share.
Give necessary Journal entries for the above transactions.

Answer:

Issued capital 40,000 shares of Rs 10 each at premium of Rs 2

Applied Rs 60,000 shares

Allotment made as:

 

Payable as:

 

 

Applied

 

Allotted

 

Application

Rs 2

48,000

 

40,000

 

Allotment

Rs 5

(3+2)

12,000

 

NIL

 

First Call

Rs 2

 

60,000

 

40,000

 

Second and Final Call

Rs 3

 

 

 

 

 

 

Rs12 

(10+2) per share

 

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

1,20,000

 

 

To Equity Share Application A/c

 

 

1,20,000

 

(Application money received for 60,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

1,20,000

 

 

To Equity Share Capital A/c

 

 

80,000

 

To Equity Share Allotment A/c

 

 

16,000

 

To Bank A/c

 

 

24,000

 

(Share application of 40,000 shares transferred to share capital, Rs 16,000 adjusted on allotment and remaining Rs 24,000 refunded)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

2,00,000

 

 

To Equity Share Capital A/c

 

 

1,20,000

 

To Securities Premium A/c

 

 

80,000

 

(Share allotment due on 40,000 shares at Rs 5 each including Rs 2 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,76,640

 

 

To Equity Share Allotment A/c

 

 

1,76,640

 

(Share allotment received on all shares except on 1,600 Shares held by Ram)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

80,000

 

 

To Equity Share Capital A/c

 

 

80,000

 

(First call due on 40,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

72,800

 

 

To Equity Share First Call A/c

 

 

72,800

 

(First call received on 36,400 shares and holders of 3,600 failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Second and Final Call A/c

Dr.

 

1,20,000

 

 

To Equity Share Capital A/c

 

 

1,20,000

 

(Second and final call due on 40,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,09,200

 

 

To Equity Share second and Final Call A/c

 

 

1,09,200

 

(Second and final call received on 36,400 shares and holders of 3,600 shares failed to pay it)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

16,000

 

 

Securities Premium A/c

Dr.

 

3,200

 

 

To Share Forfeiture A/c

 

 

3,840

 

To Equity Share Allotment A/c

 

 

7,360

 

To Equity Share first Call A/c

 

 

3,200

 

To Equity Share Second and Final Call A/c

 

 

4,800

 

(1600 shares held by Ram forfeited for non-payment amount due including premium)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

20,000

 

 

To Equity Share Forfeiture A/c

 

 

10,000

 

To Equity Share First Call A/c

 

 

4,000

 

To Equity Share Second and Final Call A/c

 

 

6,000

 

(2,000 shares held by Shyam forfeited for non-payment of amount due)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

28,800

 

 

Share Forfeiture A/c

Dr.

 

7,200

 

 

To Equity Share Capital A/c

 

 

36,000

 

(3,600 shares of Rs 10 each re-issued at Rs 8 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

6,640

 

 

To Capital Reserve A/c

 

 

6,640

 

(Balance in Share Forfeiture transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Notes:

Ram’s shares

Number of shares applied by Ram

Money received on Application (1,920 shares × Rs 2)

=

Rs 3,840

Less: Application money transferred to Share Capital (1,600 shares × Rs 2)

=

Rs 3,200

Excess money on Application

=

Rs 640

 

Share Allotment due (1,600 shares × Rs 5)

Rs

8,000

Less: Excess money on Application

Rs

640

Calls-in-Arrears on Allotment

Rs

7,360

Share Allotment

Share Allotment due (40,000 shares × Rs 5)

2,00,000

Less: Excess money on Application

16,000

 

1,84,000

Less: Calls-in-Arrears by Ram

7,360

Money received on Allotment

1,76,640

Share First Call

Share First Call due (40,000 shares × Rs 2)

80,000

Less: Calls-in-Arrears by Ram and Shyam (3,600 shares ×Rs 2)

7,200

Money received on First Call

72,800

Share Final Call

Share Final Call due 40,000 Shares × Rs 3

1,20,000

Less: Calls-in-Arrears by Ram and Shyam (3,600 shares × Rs 3)

10,800

Money received on Second and Final Call

1,09,200

Capital Reserve

Share Forfeiture on Ram’s shares (money received on application)

3,840

 

Share Forfeiture on Shyam’s shares (2,000 shares × Rs 5)

10,000

 

 

13,840

Cr.

Less: Share Forfeiture

7,200

Dr.

Capital Reserve

6,640

 

 

Page No 8.130:

Question 86:

X Ltd . issued a prospectus inviting applications for 50,000 Equity Shares of ₹  10 each, payable  ₹  5 as per application (including ₹  2 as premium), ₹  4 as per allotment and the balance towards first and final call.
Applications were received for 65,000 shares. Application money received on 5,000 shares  was refunded with letter of regret and allotments were made on pro rata basis to the applicants of 60,000 shares. Money overpaid on applications including premium was adjusted on account of sums due on allotment.
Mr Sharma to whom 700 shares were allotted failed to pay  the allotment money and his shares were forfeited by the Directors on his subsequently failure to pay the call money.
All the forfeited shares were subsequently sold to Mr.Jain credited as fully paid-up for ₹  9 per share .
You are required to set out the journal entries and the relevant entries in the Cash Book.

Answer:

Issued shares 50,000 of Rs 10 each at a premium of Rs 2

Applied share 65,000

Allotment made as

 

Payable as:

 

Applied

 

Alloted

 

Application

Rs 5

(3 + 2)

60,000

 

50,000

 

Allotment

Rs 4

 

5,000

 

NIL

 

First and Final Call

Rs 3

 

65,000

 

50,000

 

 

Rs 12

(10 + 2) per share

 

 

 

Cash Book

Dr.

 

Cr.

Date

Particulars

L.F.

Bank

Rs

Date

Particulars

L.F.

Bank

Rs

 

 

 

 

 

 

 

 

 

Equity Share Application

 

3,25,000

 

Equity Share Application

 

25,000

 

Equity Share Allotment

 

1,47,900

 

 

 

 

 

Equity Share First and Final Call

 

1,47,900

 

Balance c/d

 

6,02,100

 

Equity Share Capital

 

6,300

 

 

 

 

 

 

 

6,27,100

 

 

 

6,27,100

 

 

 

 

 

 

 

 

 

 

Books of X Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

3,00,000

 

 

To Equity Share Capital A/c

 

 

1,50,000

 

To Securities Premium

 

 

1,00,000

 

To Equity Share Allotment A/c

 

 

50,000

 

(Share application money of 50,000 shares transferred to share capital at Rs 3 each and to premium Rs 2 each and Rs 50,000 adjusted on allotment)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

2,00,000

 

 

To Equity Share Capital A/c

 

 

2,00,000

 

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

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

1,50,000

 

 

To Equity Share Capital A/c

 

 

1,50,000

 

(First and final call due on 50,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

7,000

 

 

To Share Forfeiture A/c

 

 

2,800

 

To Equity Share Allotment A/c

 

 

2,100

 

To Equity Share First and Final A/c

 

 

2,100

 

(700 shares of Rs 10 each forfeited for the non-payment of amount due)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

700

 

 

To Equity Share Capital A/c

 

 

700

 

(Loss on issue Re 1 on 700 shares charged from the Share Forfeiture Account)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,100

 

 

To Capital Reserve A/c

 

 

2,100

 

(Balance in Share Forfeiture after re-issue transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Notes-

Mr. Sharma’s Share

Number of shares applied by Mr Sharma

Money received on Application 840 shares × Rs 5

=

4,200

Less: Money transferred to Share Capital 700 shares × Rs 3

=

2,100

Less: Securities Premium 700 shares × Rs 2

=

1,400

Excess money on Application

 

700

 

Allotment due 700 shares × Rs 4

=

2,800

Less: Excess money on Application

 

700

Calls-in Arrears on Allotment

 

2,100

Share Allotment

Share Allotment due 50,000 × Rs 4

=

2,00,0000

Less: Excess money on Application

=

50,000

Less: Calls-in-Arrears

=

2,100

Money received on Application

 

1,47,900

Share First and Final Call

Share First and Final Call due 50,000 Shares × Rs 3

=

1,50,000

Less: Calls in Arrears on  700 shares × Rs 3

=

2,100

Money received on First and Final Call

 

1,47,900

Capital Reserve

Money received on Application from Mr Sharma

=

Rs 4,200

Less: Securities Premium 700 × Rs 2

=

Rs 1,400

Share Forfeiture

Cr.

 

2,800

Share Forfeiture 700 × Re 1

Dr.

 

700

Capital Reserve

 

2,100



Page No 8.131:

Question 87:

Super Star Ltd. issued a prospectus inviting applications for 2,000 shares of ₹  10 each at a premium of ₹  2 per share , payable as:
 

   On application      ₹ 3 per share (including ₹  1 premium),
  On allotment      ₹  4 per share (including ₹  1 premium),
  On first call      ₹  3 per share
  On second and final call      ₹  2 per share.

Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares . It was decided to utilise excess application money towards  the amount due on allotment .
Ramesh, to whom 40 shares  were allotted , failed  to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Rajesh, who applied  for 72 shares failed to pay  the two calls and on such failure, his shares were forfeited . 
Of the shares forfeited, 80 shares were sold to Krishan credited as fully paid-up for ₹  9 per share, the whole of Ramesh's shares being  included.
Give journal entries to record the above transactions ( including cash transactions).

Answer:

Issued capital 2,000 shares of Rs 10 each at premium of Rs 2

Applied shares 3,000

Allotment made as:

 

Payable as:

 

Applied

 

Allotted

 

Application

Rs 3

(2 + 1)

2,400

 

2,000

 

Allotment

Rs 4

(3 + 1)

600

 

NIL

 

First Call

Rs 3

 

 

 

 

 

Final Call

Rs 2

 

3,000

 

2,000

 

 

Rs 12

(10 + 2) per share

 

Books of Super Star Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

9,000

 

 

To Share Application A/c

 

 

9,000

 

(Share application money received for 3,000 shares at Rs 3 per share including Re 1 premium)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

9,000

 

 

To Share Capital A/c

 

 

4,000

 

To Securities Premium A/c

 

 

2,000

 

To Share Allotment A/c

 

 

1,200

 

To Bank A/c

 

 

1,800

 

(Share application money of 2,000 shares transferred to Share Capital and securities premium at Rs 2, and Re 1 each respectively, Rs 1,800 adjusted on allotment and remaining Rs 1,200 refunded)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

8,000

 

 

To Share Capital A/c

 

 

6,000

 

To Securities Premium A/c

 

 

2,000

 

(Allotment due on 2,000 shares at Rs 4 per share including Re 1 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,664

 

 

To Share Allotment A/c

 

 

6,664

 

(Allotment received for 1960 shares after adjustment of excess application money)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

6,000

 

 

To Share Capital A/c

 

 

6,000

 

(First call due on 2,000 shares of at Rs 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

5,700

 

 

To Share First Call A/c

 

 

5,700

 

(Share First Call received for 1,900 shares)

 

 

 

 

 

 

 

 

 

Share Capital A/c

Dr.

 

320

 

 

Securities Premium A/c

Dr.

 

40

 

 

To Share Forfeiture A/c (144 – 40)

 

 

104

 

To Share Allotment A/c

 

 

136

 

To Share First Call A/c

 

 

120

 

(40 shares of Rs 10 each, Rs 8 called-up for non-payment of money due on allotment and first including Re 1 premium)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

3,920

 

 

To Share Capital A/c

 

 

3,920

 

(Final call due on 1,960 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,800

 

 

To Share Final Call A/c

 

 

3,800

 

(Final call received for 1,900 shares)

 

 

 

 

 

 

 

 

 

Share Capital A/c

Dr.

 

600

 

 

To Share Forfeiture A/c

 

 

300

 

To Share First Call A/c

 

 

180

 

To Share Final Call A/c

 

 

120

 

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

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

720

 

 

Share Forfeiture A/c

Dr.

 

80

 

 

To Share Capital A/c

 

 

800

 

(80 shares of Rs 10 each re-issued at Rs 9 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

224

 

 

To Capital Reserve A/c

 

 

224

 

(Balance in Share Forfeiture Account of 80 re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Notes-

Ramesh’s Shares

Number of shares applied

Money received on Application (48 shares × Rs 3)

=

Rs

144

Less: Application money adjusted to Share Capital (40 shares × Rs 2)

=

Rs

80

Less: Securities Premium (40 shares × Re 1)

=

Rs

40

Excess money Application

=

Rs

24

 

Allotment due (40 shares × Rs 4)

=

Rs

160

Less: Excess money on Application

=

Rs

24

Calls-in-Arrears

 

Rs

136

Rajesh’s Shares

Number of shares allotted = 2,0002,400×72=60 shares

Share Allotment

Money due on Allotment (2,000 shares × Rs 4)

8,000

Less: Excess application money adjusted

1,200

Less: Calls-in-Arrears

136

Money received on Allotment

6,664

Share First Call

Money due on First Call (2,000 shares × Rs 3)

6,000

Less: Calls-in-Arrears on Ramesh (40 shares × 3)

120

Less: Calls-in-Arrears on Rajesh (60 shares × 3)

180

Money received on First Call

5,700

Share Final Call

Money due on Final Call (1,960 shares × Rs 2)

3920

Less: Calls in Arrest on Rajesh (60 shares × Rs 2)

120

Money received on Final Call

3,800

Capital Reserve

Ramesh
 

Money received from Ramesh

144

Less: Securities Premium (40 shares × Re 1)

40

Share Forfeiture

Cr.

104

Share forfeiture 40 × Rs 1

Dr.

40

Capital Reserve of Ramesh

64

Rajesh

Share Forfeiture

Cr.

Rs

5 per share

Share Forfeiture

Dr.

Rs

1 per share

Share Forfeiture after re-issue

Rs

4 per share

Capital Reserve on Rajesh’s shares = Share Forfeiture after re-issue (per share) × No. of shares re-issued

= Rs 4 × 40

= Rs 160

Total Capital Reserve = Capital Reserve of 40 shares of Ramesh + Capital Reserve of 40

shares of Rajesh

= 64 + 160

= Rs 224

Page No 8.131:

Question 88:

Bharat Ltd . invited applications for issuing 2,00,000 Equity Shares of ₹  10 each. The amount was payable as:
On application ₹  3 per share , on allotment ₹  5 per share and on first and final call ₹  2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were  allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted  50,000 shares on pro rata basis.
Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment . Sharma, who had  applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call . His shares  were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ ₹ 8 per share . The reissued shares included all the forfeited shares of Bajaj.
Give necessary  journal entries to record the above transactions.

Answer:

Issued capital 2,00,000 shares of Rs 10 each.

Applied shares 3,00,000

Allotment made as:

 

Payable as:

 

Applied

 

Allotted

 

Application

Rs 3

 

2,00,000

 

1,50,000

 

Allotment

Rs 5

 

1,00,000

 

50,000

 

First and Final Call

Rs 2

 

3,00,000

 

2,00,000

 

 

Rs 10

 per share

 

Books of Bharat Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Bank A/c

Dr.

 

9,00,000

 

 

To Equity Share Application A/c

 

 

9,00,000

 

(Application money received for 3,00,000 shares at Rs 3 each)

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

9,00,000

 

 

To Equity Share Capital A/c

 

 

6,00,000

 

To Equity Share Allotment A/c

 

 

3,00,000

 

(Application money of 2,00,000 shares at Rs 3 each transferred to Shares Capital and excess money Rs 3,00,000 adjusted on allotment)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

10,00,000

 

 

To Equity Share Capital A/c

 

 

10,00,000

 

(Allotment due on 2,00,000 shares at Rs 5 each)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,88,000

 

 

To Equity Share Allotment A/c

 

 

6,88,000

 

(Allotment received on 1,97,000 shares)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

24,000

 

 

To Share Forfeiture A/c

 

 

12,000

 

To Share Allotment A/c

 

 

12,000

 

(3,000 shares forfeited for the non-payment of money due on allotment)

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

3,94,000

 

 

To Equity Share Capital A/c

 

 

3,94,000

 

(First and Final call due on 1,97,000 shares at Rs 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

 

3,92,000

 

 

To Equity Share First and Final Call A/c

 

 

3,92,000

 

(Share First and Final Call received on 1,97,000 shares)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

10,000

 

 

To Share Forfeiture A/c

 

 

8,000

 

To Equity Share First and Final Call A/c

 

 

2,000

 

(1,000 shares forfeited for the non-payment of first and final call)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

28,000

 

 

Share Forfeiture A/c

Dr.

 

7,000

 

 

To Equity Share Capital A/c

 

 

35,000

 

(3,500 shares of Rs 10 each re-issued at Rs 8 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

9,000

 

 

To Capital Reserve A/c

 

 

9,000

 

(Balance in Share Forfeiture of 3,500 re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

Working Note:

Bajaj’s Share

Number of shares applied

Money received on Application (4,000 shares × Rs 3)

=

12,000

Less: Money transferred to Shares capital (3000 shares × Rs 3)

=

9,000

Excess money on Application

 

3,000

 

Allotment due (3,000 shares × Rs 5)

=

15,000

Less: Excess money on application

=

3,000

Calls-in-Arrears on Allotment

 

12,000

Share Allotment

Money due an allotment (2,00,000 shares × Rs 5)

=

10,00,000

Less: Excess money on Application

=

3,00,000

Less: Calls-in-Arrears on Bajaj’s shares

=

12,000

Money received on Allotment

=

Rs 6,88,000

Sharma’s shares

Number of shares allotted

Capital Reserve

Forfeiture of shares held by Bajaj

Share Forfeiture Credit

=

Rs 4 per shares

Share Forfeiture Debit on re-issue

=

Rs 2

per share

Share Forfeiture after re-issue

 

Rs 2

per share

 

Capital Reserve on re-issue of Bajaj’s shares

=

Rs 2 × 3,000 (no. of shares re-issued)

 

=

Rs 6,000

Forfeiture of shares held by Sharma

Share Forfeiture Credit

Rs 8

per share

Share Forfeiture Debit on re-issue

Rs 2

per share

 

Rs 6

per share

Capital Reserve on re-issue of 500 Shares of Sharma = Rs 6 × 500 (no. of shares re-issued) = Rs 3,000

Total Capital Reserve on 3,500 shares = 6,000 (re-issue of Bajaj’s) + 3,000 (re-issue of Sharma’s) = Rs 9,000

 

Page No 8.131:

Question 89:

Amrit Ltd. issued 50,000 shares of ₹  10 each at a premium of ₹ 2 per share payable as ₹ 3 on application, ₹ 4 on allotment (including premium) , ₹ 2 on first call and the remaining on second call.
Applications were received for 75,000 shares and pro rata allotment was made to all the applicants.
All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for ₹ 9,600. Final call was not made . Pass necessary Journal entries.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,25,000

 

 

  To Share Application A/c (75,000×3)

 

 

 

2,25,000

 

(Application money received)

 

 

 

 

 

 

 

 

 

 

 

Share Application  A/c

Dr.

 

2,25,000

 

 

  To Share Capital A/c (50,000×3)

 

 

 

1,50,000

 

  To Share Allotment A/c

 

 

 

75,000

 

(Application money adjusted on allotment)

 

 

 

 

 

 

 

 

 

 

 

Share Allotment A/c (50,000×4)

Dr.

 

2,00,000

 

 

  To Share Capital A/c

 

 

 

1,00,000

 

  To Securities Premium A/c

 

 

 

1,00,000

 

(Allotment money due on 50,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,23,000

 

 

Calls-in-Arrears A/c

Dr.

 

2,000

 

 

  To Share Allotment A/c

 

 

 

1,25,000

 

(Allotment money received)

 

 

 

 

 

 

 

 

 

 

 

Share First Call  A/c (50,000×2)

Dr.

 

1,00,000

 

 

  To Share Capital A/c

 

 

 

1,00,000

 

(First call money due on 50,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

98,400

 

 

Calls-in-Arrears A/c (800×2)

Dr.

 

1,600

 

 

  To Share First Call A/c

 

 

 

1,00,000

 

(Call money received)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c (800×7)

Dr.

 

5,600

 

 

Securities Premium A/c (800×2)

Dr.

 

1,600

 

 

  To  Calls-in-Arrears A/c

 

 

 

3,600

 

  To Share Forfeiture A/c (1,200×3)

 

 

 

3,600

 

(800 shares forfeited for non-payment of allotment and call money)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,600

 

 

  To Share Capital A/c

 

 

 

5,600

 

  To Securities Premium A/c

 

 

 

4,000

 

(Shares reissued at a premium)

 

 

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c                                            

Dr.

 

3,600

 

 

  To Capital Reserve A/c

 

 

 

3,600

 

(Profit on reissue transferred to capital reserve)

 

 

 

 

 

 

 

 

Working Notes:

WN1 Calculation of No. of Shares Allotted to Sonu


WN2 Calculation of Amount Received on Allotment



Page No 8.132:

Question 90:

The Directors of Super Star Ltd. invited applications for 2,00,000 Equity Shares of ₹  10 each to be issued at 20% premium. The money payable per shares was: on application ₹  5, on allotment ₹  4 (including premium of ₹  2), first call ₹  2  and final call ₹  1.

Applications were received for 2,40,000 shares and allotment was made as:
(i) to applicants for 1,00,000 shares in full,
(ii) to applicants for 80,000 shares60,000 shares,
(iii) to applicants for 60,000 shares40,000 shares.

Applicants of 1,000 shares falling in Category
(i) and applicants of 1,200 shares falling in Category
(ii) failed to pay allotment money. These shares were forfeited on failure to pay first call. Holders of 1,200 shares falling in Category
(iii) failed to pay the first and final call and these shares were forfeited after final call.

1,300 shares[1,000 of Category(i) and 300 of Category (ii)] were reissued at ₹  8 per share as fully paid-up.
Journalise the above transactions. Prepare Cash book and Balance Sheet.

Answer:

Applied shares 2,40,000

Allotment made as:

 

Payable as:

 

Applied

 

Allotted

 

Application

Rs 5

 

1,00,000

 

1,00,000

 

Allotment

Rs 4

(2 + 2)

80,000

 

60,000

 

First Call

Rs 2

 

60,000

 

40,000

 

Final Call

Re 1

 

2,40,000

 

2,00,000

 

 

Rs 12

(10 + 2) per share

 

Cash Book

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

 

 

 

 

 

 

 

Equity Share Application (2,40,000 × Rs 5)

12,00,000

 

 

 

 

 

 

 

 

 

 

 

Balance c/d

 

 

Equity Share Allotment (See note-2)

5,93,900

 

 

 

Equity Share First Call (See note-3)

3,93,800

 

 

 

Equity Share First Call

1,96,900

 

 

 

(1,96,900 shares × Re 1)

 

 

 

 

Equity Share Capital (1,000 shares of category i)

8,000

 

 

 

Equity Share Capital (300 shares of category ii)

2,400

 

23,95,000

 

 

23,95,000

 

23,95,000

 

 

 

 

 

 

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

12,00,000

 

 

To Equity Share Capital A/c

 

 

10,00,000

 

To Equity Share allotment A/c

 

 

2,00,000

 

(Equity Share application money of 2,00,000 shares at Rs 5 each transferred to Share Capital and Rs 2,00,000 adjusted on allotment)

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

8,00,000

 

 

To Equity Share Capital A/c

 

 

4,00,000

 

To Securities Premium A/c

 

 

4,00,000

 

(Share allotment due on 2,00,000 shares at Rs 4 each including Rs 2 premium)

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

4,00,000

 

 

To Equity Share Capital A/c

 

 

4,00,000

 

(First call due on 2,00,000 shares at Rs 2 each)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

9,000

 

 

Securities Premium A/c

Dr.

 

2,000

 

 

To Share Forfeiture A/c (900 shares × Rs 5)

 

 

5,000

 

To Equity Share Allotment A/c (900 shares × Rs 4)

 

 

4,000

 

To Equity Share First Call A/c (900 shares × Rs 2)

 

 

2,000

 

(1,000 shares of category (i) Rs 10 each, on which Rs 8 had  called-up, forfeited for the non-payment of amount due)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

8,100

 

 

Securities Premium A/c

Dr.

 

1,800

 

 

To Share Forfeiture A/c

 

 

6,000

 

To Equity Shares Allotment A/c

 

 

2,100

 

To Equity Shares First-Call A/c

 

 

1,800

 

(900 shares of category (ii) forfeited for the non-payment of amount due)

 

 

 

 

 

 

 

 

 

Equity Share Final Call A/c

Dr.

 

1,98,100

 

 

To Equity Shared Capital A/c

 

 

1,98,100

 

(Final call due on 1,98,100 shares at Re 1 each)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

12,000

 

 

To Share Forfeiture A/c

 

 

8,400

 

To Share First Call A/c

 

 

2,400

 

To Share Final Call A/c

 

 

1,200

 

(1,200 shares of category (iii) forfeited for the non-payment amount due)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,000

 

 

To Equity Share Capital A/c

 

 

2,000

 

(Loss on re-issue of 1,000 shares of category (i) charged from Share Forfeiture Account)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

600

 

 

To Equity Share Capital A/c

 

 

600

 

(Loss on re-issue of 300 of category (ii) charged from Share Forfeiture Account)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

4,400

 

 

To Capital Reserve A/c

 

 

4,400

 

(Balance in Share Forfeiture Account of 1,300 re-issued shares transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Super Star Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

19,94,400

b. Reserves and Surplus

2

4,00,600

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

23,95,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

23,95,000

Total

 

23,95,000

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

……. Equity Shares of Rs 10 each

-

 

Issued Share Capital

 

 

 2,00,000 Equity Shares of Rs 10 each

20,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,98,200 Equity Shares of Rs 10 each

19,82,000

 

 

 Add: Shares Forfeited (600 shares × Rs 6.66)

4,000

 

 

 Add: Shares Forfeited (1,200 shares × Rs 7)

8,400

19,94,400

   

 

2

Reserves and Surplus

 

 

Securities Premium

3,96,200

 

 

Capital Reserve

4,400

4,00,600

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

23,95,000

 

 

 

Working Notes:

1. 1,200 shares of Category (ii)

Number of share allotted

Money received on application (1,200 shares × Rs 5)

=

6,000

Less: Application money transferred to Share Capital (900 shares × Rs 5)

=

4,500

Excess money received from 1,200 shares on Application

=

1,500

 

Money due on Allotment (900 shares × Rs 4)

=

3,600

Less: Excess money on Application

=

1,500

Calls-in-Arrears on Allotment of category (ii)

 

2,100

2. Share Allotment

Money due on Allotment (2,00,000 shares × Rs 4)

=

8,00,000

Less: Excess money on Application

=

2,00,000

Less: Calls-in-Arrears 1,000 shares of category (i) (1,000 shares × Rs 4)

=

4,000

Less: Calls-in-Arrears 1,200 shares of category (ii)

=

2,100

Money received on Allotment

=

5,93,900

3. Share First Call

First Call due on 2,00,000 shares × Rs 2

=

4,00,000

Less: Calls-in-Arrears on 3,100 shares × Rs 2 (1,000 + 900 + 1,200 shares of category (i), (ii) and (iii) respectively)

 

(6,200)

Money received on First Call

 

3,93,800

4. Share Final Call

Money due on Share Final Call (2,00,000 – 1900) × Rs 1

=

1,98,100

Less: Calls-in-Arrears of 1,200 shares of Category (iii)

 

1,200

Money received on Final Call

 

1,96,900

Capital Reserve

Calculation of Share Forfeiture of 1,000 shares of category (i) 

Share Forfeiture

Rs 5,000

Cr.

Less: Share Forfeiture

Rs 2,000

Dr.

Capital Reserve of 1,000 shares (balance after re-issue)

Rs 3,000

Cr.

Calculation of Share Forfeiture of 300 shares of category (ii)

Share Forfeiture =  Credit

=

Rs

6.67

per share

Less: Share Forfeiture Debit

=

Rs

2

per share

Capital Reserve (balance after re-issue)

=

Rs

4.67

per share

Capital Reserve of 300 shares = Capital Reserve (per share) × No. of shares re-issued = Rs 4.67 × 300 shares = Rs 1,400

Total Capital Reserve of 1,300 shares = Capital Reserve of 1,000 shares of category (i) + Capital Reserve of 300 shares of category (ii) = 3,000 + 1,400 = Rs 4,400

Page No 8.132:

Question 91:

XYZ Ltd . issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a premium of ₹ 4 per share , payable as:
                 

        On application                ₹ 6 (including ₹ 1 premium)
       On allotment                     ₹ 2 (including ₹ 1 premium)
       On first  call                    ₹ 3 (including ₹ 1 premium)
       On second and final call                    ₹ 3 (including ₹ 1 premium)

Applications were received for 3,000 shares and pro rata allotment was made on the applications for  2,400 shares. It was decided to utilise excess application money towards the amount due on allotment .

X, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call , his shares were forfeited.

Y, who applied for 72 shares failed to pay the two calls and on his such failure , his shares were forfeited. 

Of the shares forfeited , 80 shares were sold to Z credited as fully paid-up for  ₹ 9 per share , the whole of Y's shares being included . Prepare Journal , Cash Book and the Balance Sheet .

Answer:

Applied shares 3,000

Allotment made as:

 

Payable as:

 

Applied

 

Allotted

 

Application

Rs 6

(5 + 1)

2,400

 

2,000

 

Allotment

Rs 2

(1 + 1)

600

 

NIL

 

First Call

Rs 3

(2 + 1)

 

 

 

 

Final Call

Rs 3

(2 + 1)

3,000

 

2,000

 

 

Rs 14

(10 + 4) per share

 

Cash Book

Dr.

 

 

 

 

Cr.

Date

Particulars

Bank

Rs

Date

Particulars

Bank

Rs

 

 

 

 

 

 

 

Share Application

18,000

 

Share Application

3,600

 

(3,000 shares × Rs 6)

 

 

(600 shares × Rs 6)

 

 

Share Allotment (see note-2)

1,568

 

 

 

 

Share First Call (see note-4)

5,700

 

 

 

 

Share Final Call (see note-5)

5,700

 

 

 

 

Share Capital

720

 

Balance c/d

28,088

 

(80 shares × Rs 9)

 

 

 

 

 

 

31,688

 

 

31,688

 

 

 

 

 

 

 

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Share Application A/c

Dr.

 

14,400

 

 

To Share Capital A/c

 

 

10,000

 

To Securities Premium A/c

 

 

2,000

 

To Share Allotment A/c

 

 

2,400

 

(Share application money of 2,000 shares transferred to Share Capital and Securities Premium at Rs 5 and Re 1 each respectively and Rs 2,400 adjusted on allotment)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

4,000

 

 

To Share Capital A/c

 

 

2,000

 

To Securities Premium A/c

 

 

2,000

 

(Allotment due on 2,000 shares at Rs 2 each including Re 1 premium)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

6,000

 

 

To Share Capital A/c

 

 

4,000

 

To Securities Premium A/c

 

 

2,000

 

(First call due on 2,000 shares at Rs 3 each including Re 1 premium)

 

 

 

 

 

 

 

 

 

Share Capital A/c (40 shares × Rs 8)

Dr.

 

320

 

 

Securities Premium A/c

Dr.

 

72

 

 

To Share Forfeiture A/c

 

 

240

 

To Share Allotment A/c

 

 

32

 

To Share First Call A/c

 

 

120

 

(40 shares of Rs 10 each Rs 8 called with premium forfeited for non-payment of amount due)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

5,880

 

 

To Share Capital A/c

 

 

3,920

 

To Securities Premium A/c

 

 

1,960

 

(Final call due on 1,960 shares at Rs 3 each including Re 1 premium)

 

 

 

 

 

 

 

 

 

Share Capital A/c

Dr.

 

600

 

 

Securities Premium A/c

Dr.

 

120

 

 

To Share Forfeiture A/c

 

 

360

 

To Share First Call A/c

 

 

360

 

(60 shares forfeited for non-payment of amount due)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

720

 

 

Share Forfeiture A/c

Dr.

 

80

 

 

To Shares Capital A/c

 

 

800

 

(80 shares of Rs 10 each re-issued at Rs 9 per share fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

400

 

 

To Capital Reserve

 

 

400

 

(Balance of 80 reissued shares in Share Forfeiture Account transferred to Capital Reserve)

 

 

 

 

 

 

 

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

XYZ Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

19,920

b. Reserves and Surplus

2

8,168

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

28,088

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

28,088

Total

 

28,088

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

……. shares of Rs 10 each

-

 

Issued Share Capital

 

 

 2,000 shares of Rs 10 each

20,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,980 shares of Rs 10 each

19,800

 

 

   Add: Shares Forfeited (20 shares × Rs 6)

120

19,920

   

 

2

Reserves and Surplus

 

 

Securities Premium

7,768

 

 

Capital Reserve

400

8,168

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

28,088

 

 

 

Working Notes:

1. X’s Shares

Number of share applied by X

Money received on application (48 shares × Rs 6)

=

288

Less: Money transferred to Shares Capital (40 shares × Rs 5)

=

200

Less: Securities Premium (40 shares × Re 1)

=

40

Excess money on application from X

=

48

 

 

Utilisation of excess application money received from X

 

 

Share Capital due on Allotment (40 shares × Re 1)

=

40

Less: Excess money on Application from X

=

48

Excess money after adjustment of Share Capital on Allotment

=

8

 

 

 

Securities Premium due on Allotment (40 shares × Re 1)

=

40

Less: Excess money after adjustment of Share Capital on  Allotment

=

8

Calls-in-Arrears of Securities Premium on  Allotment

=

32

2. Share Allotment 

Money due on allotment (2,000 shares × Rs 2)

=

4,000

Less: Excess money on Application

=

2,400

 

=

1,600

Less: Calls-in-Arrears on X‘s shares (securities premium)

=

32

Money received on allotment

=

Rs 1,568

3. Y’s Shares 

Number of shares allotted

4. Share First Call 

Money due on Share First Call (2,000 shares × Rs 3)

=

6,000

Less: Calls-in-Arrears on X‘s shares (40 shares × Rs 3)

=

120

Less: Calls-in-Arrears on Y’s shares (60 shares × Rs 3)

=

180

Money received on Share First Call

=

5,700

5. Share Final Call 

Money due on share Final Call (1,960 shares × Rs 3)

=

5,880

Less: Calls-in-Arrears on Y’s shares (60 shares × Rs 3)

=

180

Money received on Share Final Call

=

5,700

Capital Reserve

X’s shares

Money received from X for 40 shares

=

288

Less: Securities Premium adjusted on Application

=

40

Less: Securities Premium adjusted on Allotment

=

8

Balance in the Share Forfeiture  before re-issue of shares Cr.

 

240

 

Share Forfeiture Credit

=

Rs

6

per share

Share forfeiture Debit

=

Rs

1

per share

 

 

Rs

5

per share

Capital Reserve on re-issue of 20 shares = Rs 5 × 20 shares = Rs 100

Y’s Shares

Share Forfeiture on 60 Shares of Y

Share Forfeiture Credit

Rs 6

per share

Less: Share Forfeiture Debit

Rs 1

per share

 

Rs 5

per share

Capital Reserve on re-issue of 60 shares of Y = Rs 5 × 60 shares = Rs 300

Total Capital Reserve on 80 shares = Capital Reserve on re-issue of 20 shares of X + Capital Reserve on re-issue of 60 shares of Y = 100 + 300 = Rs 400



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