Question

A Company issued 50,000 equity shares of Rs 10 each at par payable as under:

On Application Rs 2; on allotment Rs 1; on first call Rs 3 and on final call Rs 4 per share (four months after first call).

Amount due on application and allotment was duly received. One shareholder holding 1,000 shares could not pay the first call money in time. Another shareholder holding 2,000 shares paid the final call money along with the first call money.

Final call was made. All the shareholders paid in full. First call arrear on 1,000 shares were also received at the time of final call.

(a) Make entries in the Company's journal for transactions relating to first call and final call.

(b) Company also decided to provide free transportation facility to its employees. Identify the value involved in this decision.

Answer 1

$\text{(a)}\text{JOURNAL}$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr.}& & 1,55,000& \\ & \text{To Share First Call A/c}& & & & 1,47,000\\ & \text{To Calls in Advance A/c}(2,000\times \text{Rs}4)& & & & 8,000\\ & \text{Alternatively :}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 1,55,000& \\ & \text{Calls in Arrears A/c}(1,000\times \text{Rs}3)& \text{Dr.}& & 3,000& \\ & \text{To Share First Call A/c}& & & & 1,50,000\\ & \text{To Calls in Advance A/c}(2,000\times \text{Rs}4)& & & & 8,000\\ & \text{(First Call money received except on 1,000 shares and}& & & & \\ & \text{final call received in advance on 2,000 shares)}& & & & \\ & \text{Equity Share First Call A/c}& \text{Dr.}& & 1,50,000& \\ & \text{To Equity Share Capital A/c}& & & & 1,50,000\\ & \text{(First call due on 50,000 shares @ Rs 3 per share)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 1,92,000& \\ & \text{Calls in Advance A/c}& \text{Dr.}& & 8,000& \\ & \text{To Equity Share Final Call A/c}& & & & 2,00,000\\ & \text{(Final Call money received after adjusting calls in advance)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 3,000& \\ & \text{To Calls-in-Arrears A/c (or Equity Share First Call A/c)}& \text{Dr.}& & & 3,000\\ & \text{(Calls in arrears received)}& & & & \\ & \text{Equity Share Final Call A/c}& \text{Dr.}& & 2,00,000& \\ & \text{To Equity Share Capital A/c}& & & & 2,00,000\\ & \text{(First call due on 50,000 shares @ Rs 4 per share)}& & & & \end{array}$

(b) The decision will ensure the safety as well as timely arrival and departure of employees which in turn will enhance their loyalty and morale.