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.

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Solution

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

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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)

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