Question

Ajanta Company Limited having a normal capital of Rs 3,00,000, divided into shares of Rs 10 each offered for public subscription of 20,000 shares payable at Rs 2 on application; Rs 3 on allotment and the balance in two calls of Rs 2.50 each. Applications were received by the company for 24,000 shares. Applications for 20,000 shares were accepted in full and the shares allotted. Applications for the remaining shares were rejected and the application money was refunded.

All moneys due were received with the exception of the final call on 600 shares which were forfeited after legal formalities were fulfilled. 400 shares of the forfeited shares were reissued at Rs 9 per share.

Record necessary journal entries and prepare the balance Sheet showing the amount transferred to capital reserve and the balance in Share forfeiture account.

Answer 1

Books of Ajanta Company Limited
Date	Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c			Dr.		48,000
		To Share Application A/c					48,000
	(Share Application money received for 24,000 shares @ Rs 2 per share)
	Share Application A/c			Dr.		48,000
		To Share Capital A/c					40,000
		To Bank A/c					8,000
	(Share Application @ Rs 2 per share for 20,000 shares transferred to Share Capital and remaining for 4,000 shares rejected)
	Share Allotment A/c			Dr.		60,000
		To Share Capital A/c					60,000
	(Share Allotment money due @ Rs 3 per share on 20,000 shares )
	Bank A/c			Dr.		60,000
		To Share Allotment A/c					60,000
	(Share Allotment money received for 20,000 shares @ Rs 3 per share)
	Share First Call A/c			Dr.		50,000
		To Share Capital A/c					50,000
	(Share First Call money due on 20,000 Shares @ Rs 2.5 per share)
	Bank A/c			Dr.		50,000
		To Share First Call A/c					50,000
	(Share First Call money received for 20,000 shares @ Rs 2.5 per share)
	Share Final Call A/c			Dr.
		To Share Capital A/c
	(Share Final Call money due on 20,000 Shares @ Rs 2.5 per share)
	Bank A/c			Dr.		48,500
	Calls in Arrears A/c			Dr.		1,500
		To Share Final Call A/c					50,000
	(Share Final Call money received for 19,400 shares @ Rs 2.5 per share except 600 shares)
	Share Capital A/c			Dr.		6,000
		To Calls in Arrears A/c					1,500
		To Share Forfeiture A/c					4,500
	(600 Shares forfeited @ Rs 10 each for the non-payment of Share Final Call @ Rs 2.5 per share)
	Bank A/c			Dr.		3,600
	Share Forfeiture A/c			Dr.		400
		To Share Capital A/c					4,000
	(400 shares @ Rs 10 each for Rs 9 per share reissued)
	Share Forfeiture Account			Dr.		2,600
		To Capital Reserve A/c					2,600
	(After reissue balance of 400 shares in Forfeiture Account transferred to Capital Reserve Account)

Ajanta Company Limited
Balance Sheet
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,500
b. Reserves and Surplus	2	2,600
2. Non-Current Liabilities
3. Current Liabilities
Total		2,02,100
II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents	3	2,02,100
Total		2,02,100

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
1	Share Capital
	Authorised Share Capital
	30,000 shares of Rs 10 each		3,00,000
	Issued Share Capital
	20,000 shares of Rs 10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,800 shares of Rs 10 each	1,98,000
	Add: Shares Forfeiture	1,500	1,99,500
2	Reserves and Surplus
	Capital Reserve		2,600
3	Cash and Cash Equivalents
	Cash at Bank		2,02,100

Working Note:

Share Forfeiture Account credited	Rs 7.5 per share
Less: Share Forfeiture Account debited	Rs1 per share
Amount transferred to Capital Reserve Account, after adjustment	Rs 6.5 per share

Amount of 400 shares transferred to Capital Reserve Account, after reissue = 400 Shares @ Rs 6.5 per share = Rs 2,600