Question

A limited company offered for subscription of 1,00,000 equity shares of Rs.10 each at a premium of Rs. 2 per share. 2,00,000 : 10% Preference shares of Rs. 10 each at par. The amount on share was payable as under
$\begin{array}{ccc}& & \\ & \text{Equity Shares}& \text{Preference Shares}\\ \text{On Application}& \text{Rs.3 per share}& \text{Rs.3 per share}\\ \text{On Allotment}& \text{Rs.5 per share}& \text{Rs.4 per share}\\ & \text{(including a premium)}& \\ \text{On First Call}& \text{Rs.4 per share}& \text{Rs.3 per share}\end{array}$

All the shares were fully subscribed, called-up and paid.
Record these transactions in the journal and cash book of the company.

Answer 1

$\text{Journal Entries}\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Equity Share Application A/c}& \text{Dr}& & 3,00,000& \\ & \text{10 \% Preference Share Application A/c}& \text{Dr}& & 6,00,000& \\ & \text{To Equity Share Capital A/c}(1,00,000\times 3)& & & & 3,00,000\\ & \text{To 10 \% Preference Share Capital A/c}(2,00,000\times 3)& & & & 6,00,000\\ & \text{(Application money transferred to equity share}& & & & \\ & \text{capital)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Equity Share Allotment A/c}& \text{Dr}& & 5,00,000& \\ & \text{10 \% Preference Share Allotment A/c}& \text{Dr}& & 8,00,000& \\ & \text{To Equity Share Capital A/c}(1,00,000\times 3)& & & & 3,00,000\\ & \text{To Securities Premium A/c}(1,00,000\times 2)& & & & 2,00,000\\ & \text{To 10 \% Preference Share Allotment A/c}(2,00,000\times 4)& & & & 8,00,000\\ & \text{(Amount due on allotment)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iii)}& \text{Equity Share First and Final Call A/c}& \text{Dr}& & 4,00,000& \\ & \text{10 \% Preference Share Application A/c}& \text{Dr}& & 6,00,000& \\ & \text{To Equity Share Capital A/c}(1,00,000\times 4)& & & & 4,00,000\\ & \text{To 10 \% Preference Share Capital A/c}(2,00,000\times 3)& & & & 6,00,000\\ & \text{(Amount on first and final call due)}& & & & \end{array}$

$\text{Cash Book (Bank Column)}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ & \text{Equity Share}& & 3,00,000& & & & \\ & \text{Application}& & & & & & \\ & \text{10 \% Preference}& & 6,00,000& & & & \\ & \text{Share Application}& & & & & & \\ & \text{Equity Share}& & 5,00,000& & & & \\ & \text{Allotment}& & & & & & \\ & \text{10 \% Preference}& & 8,00,000& & & & \\ & \text{Share Allotment}& & & & & & \\ & \text{Equity Share First}& & 4,00,000& & \text{Balance c/d}& & 3,20,000\\ & \text{and Final Call}& & & & & & \\ & \text{10 \% Preference}& & 6,00,000& & & & \\ & \text{Share First and}& & & & & & \\ & \text{Final Call}& & & & & & \\ & & & \overline{\underset{–}{\underset{–}{32,00,000}}}& & & & \overline{\underset{–}{\underset{–}{32,00,000}}}\end{array}$

Note: Entries related to money received are directly taken in cash book. The entries for equity shares and preference shares can be made separately also.