Ownclasses

X Ltd. issued 40,000 Equity Shares of Rs. 10 each at a premium of Rs. 2.50 per share. The amount was payable as follows:
On application – Rs. 2 per share
On allotment – Rs. 4.50 per share (including premium)
and on call – Rs. 6 per share
Owing to heavy subscription the allotment was made on pro-rata basis as follows:
(a) Applicants for 20,000 shares were allotted 10,000 shares.
(b) Applicants for 56,000 shares were allotted 14,000 shares.
(c) Applicants for 48,000 shares were allotted 16,000 shares.
It was decided that excess amount received on applications would be utilized on allotment and the surplus would be refunded.
Ram, to whom 1,000 shares were allotted, who belong to category (a), failed to pay allotment money. His shares were forfeited after the call.
Pass the necessary Journal entries in the books of X Ltd. for the above transactions. 

Answer
Journal Entries

Date

Particulars

LF

Debit (Rs)

Credit (Rs)

 

Bank A/c                                          Dr

 

                To Equity Share Application A/c

 

(Being application money received)

 

 

 

248000

 

 

 

 

 

 

 

248000

 

 

 

 

 

 

 

 

 

 

 

180000

 

 

 

 

 

 

 

 

30500 



 

 

 

 


 

30500

 

2500

 

 

 

 

 

240000

 

 

 

 

 

 

234000

 

 

 

 

 

234000

6000

 

 

 

 

 

 

 

 

 

 

 

 10000

 

 2500

 

 

 

 

 

 

 

 

 



1000



2500 

 

 

248000

 

 

 

 

 

 

 

80000

 

147000

 

21000

 

 

 

 

 

 

 

80000

 

100000

 

 

 

 

 

 

30500 

 

 

 

 

 

 

 

  

 

33000 

 

 

 

 



240000

 

 

 

 

 

 

234000

 

 

 

 

 

 

240000 

 

 

 

 

 

 

 

 

 

 

 

 

 

4000

 

 2500

 

 6000

 

 

 

 

 

 

 

 4000



8500

 

Equity share application A/c                 Dr

 

To Equity share capital A/c

 

To Equity share Allotment A/c

 

To Bank A/c

 

(Being application money transferred)

 

 

 

Equity Share Allotment A/c                  Dr

 

To Equity Share Capital A/c

 

To Securities Premium A/c

 

(Being Allotment money due)

 

 

 

Bank A/c                                         Dr

 

                To Equity Share Allotment A/c

 

( being allotment money received)

 

Or

 

Bank A/c                                          Dr

 

Calls in Arrear A/c                             Dr

 

                To Equity Share Allotment A/c

 

( being allotment money received)

 

 

Equity Share First & Final Call A/c       Dr 

                To  Equity  Share Capital A/c

 

(Being First & Final Call money due)

 

 

Bank A/c                                          Dr

 

             To  Equity Share First & Final Call A/c

               OR

 

 

Bank A/c                                            Dr

 

Calls in Arrears A/c                             Dr

 

          To Equity Share First & Final Call A/c

 

(Being First & Final Call money received)

 

 

 

 

 





Equity Share Capital A/c                     Dr

 

Securities Premium A/c                      Dr

 

                     To Forfeited Share A/c

 

                     To  Equity  Share Allotment A/c

 

               To  Equity  Share First & Final Call A/c

 

             OR

 

Equity Share Capital A/c                     Dr

 

Securities Premium A/c                      Dr

 

To Forfeited Share A/c

 

To  Calls in Arrears  A/c

 

(Being 1000 shares forfeited)


Working note:

1) Analysis Table

Share applied (Rs)

Shares

allotted (Rs)

Application money received (Rs)

Share application money transferred to share capital a/c (Rs)

Excess application money received (Rs)

Share allotment due (Rs)

Share allotment received (Rs)

Refunded (Rs)

20000

56000

48000

10000

14000

16000

40000

112000

96000

20000

28000

32000

20000

84000

64000

45000

63000

72000

25000

 

8000

 

21000

124000

40000

248000

80000

168000

180000

33000

21000



2) Calculation of Calls in arrears on allotment:


Category (a) Applicants of 20,000 shares were allotted 10,000 shares

Ram was allotted 1000 shares, He applied for : (1000 x 20000) / 10000  = 2000 shares

Calls in arrear (1000 x 4.5 )          =  4,500

Less: Already received (1000 x 2) =   2,000

                                             = Rs 2500