You visited us 1 times! Enjoying our articles? Unlock Full Access!

Journal Entries for Re-Issue of Shares

Alfa Limited ...

Question

Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the following terms :

Payable on application

Rs 5 per share

Payable on allotment

Rs 3 per share

Payable on first and final call

Rs 2 per share

Applications for 5,00,000 shares were received. It was decided :

(a) to refuse allotment to the applicants for 20,000 shares;

(b) to allot in full to applicants for 80,000 shares;

(c) to allot the balance of the available shares’ pro-rata among the other applicants; and

(d) to utilise excess application money in part as payment of allotment money.

One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ Rs 9 per share. Show the journal and prepare Cash book to record the above.

Open in App

Solution

In the books of Alfa Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Share Application A/c

Dr.

24,00,000

To Share Capital A/c

20,00,000

To Share Allotment A/c

4,00,000

(Share Application money adjusted)

Share Allotment A/c

Dr.

12,00,000

To Share Capital A/c

12,00,000

(Share Allotment money due)

Share First and Final Call A/c

Dr.

8,00,000

To Share Capital A/c

8,00,000

(Share First and Final Call due)

Working Note:

2. Call in arrears by applicant on allotment

Money received on Application

(500×5)

=

2,500

Less: Amount adjusted on Application

(400×5)

=

2,000

Amount adjusted on Allotment

500

3.

Money due on Allotment

(400×3)

1,200

Less: Money adjusted

500

Balance due on Allotment

700

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Share Capital A/c

Dr.

4,000

To Share Allotment A/c

700

To Share First & Final Call A/c

800

To Share Forfeiture A/c

2,500

(400 shares forfeited)

Share Forfeiture A/c

Dr.

400

To Share Capital A/c

400

(Share reissued and loss on issue charged from Share Forfeiture

Account)

Share Forfeiture A/c

Dr.

2,100

To Capital Reserve A/c

2,100

(Share Forfeiture Account transferred to Capital Reserve Account)

Cash Book (Bank Column)

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

Share Application

25,00,000

Share Application

1,00,000

Share Allotment

7,99,300

Balance c/d

40,02,100

Share First and Final Call

7,99,200

Share Capital

3,600

41,02,100

41,02,100

Suggest Corrections

Similar questions

Q. Alfa Limited invited applications for 4,00,000 of its equity shares of Rs.10 each on the following terms.

\begin{matrix} (Rs) Payable on application & 5 per share Payable on Allotment & 3 per share Payable on First and Final Call & 2 per share \end{matrix}

Application for 5,00,000 shares were received. It was decided

(a) To refuse allotment to the applicants for 20,000 shares;

(b) To allot in full to applicants for 80,000 shares;

(d) To utilize excess application money in part as payment of allotment money.

One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ Rs.9 per share. Show the journal and prepare cash book to record the above.

Q. XYZ Ltd. invited applications for issuing 50,000 Equity Shares of ₹10 each . The amount was payable as:

On application	$—$	₹ 3 per share,
On allotment	$—$	₹ 4 per share,
On first and final call	$—$	₹ 3 per share.

Applications were received for 75,000 shares and pro rata allotment was made as:
Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis.
Applicants for 35,000 shares were allotted 30,000 shares on pro rata basis.
Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment .
Shamu, who had applied for 700 shares out of the group applying for 35,000 shares , failed to pay the first and final call . His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. 8 per share as fully paid-up. The reissued shares included all the forfeited shares of Shamu.
Pass necessary Journal entries to record the above transactions.

Q. JS Ltd. invited applications for issuing

80, 000

equity shares of Rs.

10

each at a premium of Rs.

6

per share. The amount was payable as follows:
On application Rs.

4

per share (including premium Rs.

1

per share)
On Allotment Rs.

6

per share (including premium Rs.

3

per share)
On First and Final Call Balance.
Applications for

1, 60, 000

shares were received. Applications for

40, 000

shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Raman holding

400

shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the final call was made. Veer who had applied for

1, 200

shares failed to pay the final call. His shares were also forfeited. Out of the forfeited shares

500

shares were re-issued at Rs.

8

per share fully paid-up. The re-issued shares included all the forfeited shares of Raman.
Pass necessary journal entries for the above transactions in the books of J.S. Ltd.

Bayson Ltd. invited applications for issuing 54,000 shares of Rs 100 each payable as follows:

Rs 50 per share on application

Rs 10 per share on application

Applications were received for 80,000 shares.

Full allotment was made to the applicants of 14,000 shares. The remaining applicants were allotted 40,000 shares on pro-rata basis. Excess money received with applications was adjusted towards sums due on allotment and call.

Vibhor, holding 1,200 shares, who belonged to the category of applicants to whom full allotment was made, paid the call money at the time of allotment. Vidur, who belonged to the category of applicants to whom shares were allotted on pro-rata basis did not pay anything after application on his 400 shares.Vidur's share were forfeited after the first and final call. All the forfeited shares were later on re-issued at Rs 110 per share as fully paid up.

Pass the necessary journal entries in the books of Bayson Ltd. for the above transactions by opening calls in arrears and calls in advance wherever necessary.

Q. Bharat Ltd . invited applications for issuing 2,00,000 Equity Shares of ₹ 10 each. The amount was payable as:
On application ₹ 3 per share , on allotment ₹ 5 per share and on first and final call ₹ 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis.
Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment . Sharma, who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call . His shares were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ ₹ 8 per share . The reissued shares included all the forfeited shares of Bajaj.
Give necessary journal entries to record the above transactions.

Join BYJU'S Learning Program

Payable on application	Rs 5 per share
Payable on allotment	Rs 3 per share
Payable on first and final call	Rs 2 per share

In the books of Alfa Limited Journal
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Share Application A/c		Dr.		24,00,000
		To Share Capital A/c				20,00,000
		To Share Allotment A/c				4,00,000
	(Share Application money adjusted)

	Share Allotment A/c		Dr.		12,00,000
		To Share Capital A/c				12,00,000
	(Share Allotment money due)

	Share First and Final Call A/c		Dr.		8,00,000
		To Share Capital A/c				8,00,000
	(Share First and Final Call due)

Money received on Application	(500×5)	=	2,500
Less: Amount adjusted on Application	(400×5)	=	2,000
Amount adjusted on Allotment			500

Money due on Allotment	(400×3)	1,200
Less: Money adjusted		500
Balance due on Allotment		700

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
	Share Application		25,00,000		Share Application		1,00,000
	Share Allotment		7,99,300		Balance c/d		40,02,100
	Share First and Final Call		7,99,200
	Share Capital		3,600
			41,02,100				41,02,100