Question

A company offered 1,00,000 shares of Rs 10 each payable as Rs 3 on application, Rs 2.50 on allotment, Rs 2.50 on 1st call and Rs 2 on the final call.

The public applied for 1,52,000 shares. The shares were allotted on a pro-rata basis to the applicants of 1,50,000 shares. All shareholders paid the allotment money excepting one shareholder who was allotted 200 shares. These shares were forfeited. The first call was made thereafter. The forfeited shares were re-issued @ Rs 9 per share Rs 8 paid up. The final call was not yet made.

You are required to pass journal entries.

Answer 1

JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr.}& & 4,56,000& \\ & \text{To Share Application A/c}& & & & 4,56,000\\ & \text{(Application money received on 1,52,000 shares @ Rs 3 per share)}& & & & \\ & \text{Share Application A/c}& \text{Dr.}& & 4,56,000& \\ & \text{To Share Capital A/c}& & & & 3,00,000\\ & \text{To Share Allotment A/c}& & & & 1,50,000\\ & \text{To Bank A/c}& & & & 6,000\\ & \text{(Application money adjusted)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 99,800& \\ & \text{Calls in Arrears A/c}& \text{Dr.}& & 200& \\ & \text{To Share Allotment A/c}& & & & 1,00,000\\ & \text{(Allotment money received on 99,800 shares)}& & & & \\ & \text{Share Allotment A/c}& \text{Dr.}& & 2,50,000& \\ & \text{To Share Capital A/c}& & & & 2,50,000\\ & \text{(Allotment money due on 1,00,000 shares @ Rs 2.50)}& & & & \\ & \text{Share Capital A/c}(200\times \text{Rs.5.50})& \text{Dr.}& & 1,100& \\ & \text{To Share Allotment A/c}& & & & 200\\ & \text{To Forfeiture A/c}& & & & 900\\ & \text{(Forfeiture of 200 shares for non-payment of allotment money)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 2,49,500& \\ & \text{To Share 1st Call A/c}& & & & 2,49,500\\ & \text{(First Call money received on 99,800 shares @ Rs 2.50)}& & & & \\ & \text{Share 1st Call A/c}& \text{Dr.}& & 2,49,500& \\ & \text{To Share Capital A/c}& & & & 2,49,500\\ & \text{(First call money due on 99,800 shares @ Rs 2.50)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 1,800& \\ & \text{To Share Capital A/c}& & & & 1,600\\ & \text{To Securities Premium Reserve A/c}& & & & 200\\ & \text{(Re-issue of 200 shares @ Rs 9 per share; Rs 8 paid up)}& & & & \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & 900& \\ & \text{To Capital Reserve A/c}& & & & 900\\ & \text{(Transfer of profit on reissue)}& & & & \end{array}$

Working Notes :

(i) Excess amount received from the holder of 200 shares on application:

The shareholder who has been allotted 200 shares must have applied for more shares.

If shares allotted were 1,00,000, shares applied for were = 1,50,000

$\therefore$ If Shares allotted were 200, shares applied for were=$\frac{1,50,000}{1,00,000}\times 200=300$ Shares

Excess application money received from him:

300 shares - 200 shares = $100shares\times \text{Rs 3}=Rs300$

(ii) $\begin{array}{ccc}& & \text{Rs.}\\ \text{Amount due on allotment on these shares = 200 shares}\times \text{Rs 2.50}& =& 500\\ \text{Less: Excess received on these shares on application}& =& 300\\ \text{Amount not received on allotment}& & \overline{\underset{–}{200}}\end{array}$

$\begin{array}{ccc}& & \\ \text{(iii) Amount received on allotment:}& & \\ \text{Total amount due on allotment=1,00,000 shares}\times \text{Rs 2.50}& =& 2,50,000\\ \text{Less: Excess received on application}& =& 1,50,000\\ & & \overline{1,00,000}\\ \text{Less: Amount not received on allotment}& & \underset{–}{200}\\ \text{Amount received on allotment in cash}& & \underset{–}{\underset{–}{99,800}}\end{array}$