Question

Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each. The amount was payable as follows :

On applications and allotment - Rs 4 per share.

On First Call - Rs 3 per share.

On Second and Final Call - Balance.

Application for 1,00,000 shares were received. Shares were allotted to the applicants on pro-rata basis and excess money received with applications was transferred towards sums due on first call.

Vibha who was allotted 750 share failed to pay the first call. Her shares were immediately forfeited. Afterwards, the second call was made. The amount due on second call was also received except on 1,000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were re-issued to Mohit For Rs 9,000 as fully paid up. Pass necessary Journal entries in the books of Alfa Ltd. for the above transactions.

OR

Jeevan Dhara Ltd. Invited applications for issuing 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payble as follows :

On application-Rs 2 per share.

On allotment-Rs 5 (including premium).

On first and final call - Balance.

Application for 1,50,000 shares were received. Shares were allotted to all the applications on pro-rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call. Madhur who was allotted 2,400 Shares failed to pay the first and final call. Shares of both, Manu and Madhur were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass the necessary Journal entries for the above transactions in the books of Jeevan Dhara Ltd.

Answer 1

JOURNAL OF ALFA LTD.
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Debit}& \text{Credit}\\ & & & \left(Rs\right)& \left(Rs\right)\\ & \text{Bank A/c}Dr.& & 4,00,000& \\ & \text{To Equity Shares Application and Allotment A/c}& & & 4,00,000\\ & \left(\text{Being application and allotment money received on}\right)& & & \\ & \text{1,00,000 shares)}& & & \\ & \underset{–}{}& & & \\ & \text{Equility Share Application and Allotment A/c}Dr.& & 4,00,000& \\ & \text{To Equity Share Capital A/c}(75,000\times 4)& & & 3,00,000\\ & \text{To Calls in Advance A/c}& & & 1,00,000\\ & \text{(Being equity share allotment made)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Shares First Call A/c}(75,000\times 3)Dr& & 2,25,000& \\ & \text{To Equity Share Capital A/c}& & & 2,25,000\\ & \text{(Being first call money due)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c*}Dr.& & 1,23,750& \\ & \text{Calls-in-advance A/c}Dr.& & 1,00,000& \\ & \text{To Equity Shares First Call A/c}& & & 2,23,750\\ & \text{or, alternatively}& & & \\ & \text{Bank A/c}Dr.& & 1,23,750& \\ & \text{Calls-in-arrears A/c}Dr.& & 1,250& \\ & \text{Calls-in-advance A/c}Dr.& & 1,00,000& \\ & \text{To Equity Share First Calls A/c}& & & 2,25,000\\ & \text{(Being first call money received except on 750 shares}& & & \\ & \text{and advance adjusted)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Share Capital A/c}(750\times 7)Dr.& & 5,250& \\ & \text{To Forfeited Shares A/c}& & & 4,000\\ & \text{To Equity Share First Call/Calls in Arrears A/c}& & & 1,250\\ & \text{(Being 750 shares forfeited due to non-payment of first call}& & & \\ & \text{moeny Rs 7 called up)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Share Second and Final Call A/c}(Rs3\times 74,250)Dr& & 2,22,750& \\ & \text{To Equity Share Capital A/c}& & & 2,22,750\\ & \text{(Being second and final call money due on 74,250 shares)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c}(Rs3\times 73,500)Dr& & 2,20,500& \\ & \text{To Equity Share Second and Final Call A/c}& & & 2,20,500\\ & \text{or, alternatively}& & & \\ & \text{Bank A/c}Dr& & 2,20,500& \\ & \text{Calls-in-arrears A/c}(750\times 3)Dr& & 2,250& \\ & \text{To Equity Share Second and Final Call A/c}& & & 2,22,750\\ & \text{(Being second and final call money received except on 750}& & & \\ & \text{shares issued to Monika who had applied for 1,000 shares)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Share Capital A/c}(750\times 10)Dr.& & 7,500& \\ & \text{To Forfeited Shares A/c}& & & 5,250\\ & \text{To Equity Shares Second and Final Call/Calls}& & & \\ & \text{in arrears A/c}& & & 2,250\\ & \text{(Being 750 shares forfeited due to non-payment of}& & & \\ & \text{call money)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c}(1,500\times 6)Dr.& & 9,000& \\ & \text{Forfeited Shares A/c}(1,500\times 4)Dr.& & 6,000& \\ & \text{To Equity Share Capital A/c}& & & 15,000\\ & \text{(Being 1,500 shares re-issued for Rs 6 per share}& & & \\ & \text{fully paid up)}& & & \\ & \underset{–}{}& & & \\ & \text{Forfeited Shares A/c}(Rs4,000+Rs5,250-Rs6,000)Dr.& & 3,250& \\ & \text{To Capital REserve A/c}& & & 3,250\\ & \text{(Being profit on re-issue, i.f., balance of forfeited}& & & \\ & \text{shares A/c transferred to Capital Reserve)}& & & \end{array}$

Working Notes: *Share applied by Vibha $=\frac{1,00,000}{75,000}\times 750=1,000$ shares

Application and allotment money received $(1,000\times 4)=4,000$

Amount adjusted on application $(750\times 4)=3,000$

Excess money received on application and allotment =(4,000-3,000)=1,000

Money due on first call $(750\times 3)=2,250$

Or

$\text{BOOKS OF JEEVAN DHARA LTD}.Dr.\text{JOURNAL}Dr\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Debit}& \text{Credit}\\ & & & \left(Rs\right)& \left(Rs\right)\\ & \text{Bank A/c}(1,50,000\times 2)Dr.& & 3,00,000& \\ & \text{To Equity Shares Application A/c}& & & 3,00,000\\ & \text{(Being application money @ Rs 2 received on}& & & \\ & \text{1,50,000 shares)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Shares Application A/c}Dr.& & 3,00,000& \\ & \text{To Equity Share Capital A/c}(1,20,000\times 2)& & & 2,40,000\\ & \text{To Equity Share Allotment A/c}& & & 60,000\\ & \text{(Being equity shares application money adjusted)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Shares Allotment A/c}(1,20,000\times 5)Dr.& & 6,00,000& \\ & \text{To Equity Share Capital A/c}(1,20,000\times 3)& & & 3,60,000\\ & \text{To Securities Premium Reserve A/c}(1,20,000\times 2)& & & 2,40,000\\ & \text{(Being equity share allotment money dues)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c}Dr.& & 5,29,200& \\ & \text{To Equity Share Allotment A/c}& & & 5,29,200\\ & \text{(Being allotment money received except on}& & & \\ & \text{24,000 shares)}& & & \\ & \underset{–}{}& & & \\ & \text{First and Final Call A/c}Dr.& & 6,00,000& \\ & \text{To Equity Share Capital A/c}& & & 6,00,000\\ & \text{(Being first and final Call due)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c}(1,15,200\times 5)Dr.& & 5,76,000& \\ & \text{To First and Final Call A/c}& & & 5,76,000\\ & \text{(Being amount received except on 4,800 shares)}& & & \\ & \underset{–}{}& & & \\ & \text{Equity Share Capital A/c}Dr.& & 48,000& \\ & \text{Security Premium Reserve A/c}Dr.& & 2,400& \\ & \text{To Shares Forfeited A/c}& & & 18,000\\ & \text{To Share Allotment A/c}& & & 10,8000\\ & \text{To First and Final Call A/c}& & & 24,000\\ & \text{(Being 4,800 shares forfeited for non-payment}& & & \\ & \text{of allotment and call money)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c}(4,800\times 9)Dr.& & 43,200& \\ & \text{Forfeited Shares A/c}Dr.& & 4,800& \\ & \text{To Equity Share Capital A/c}& & & 48,000\\ & \text{(Being 4,800 forfeited shares re-issued for Rs 9 per}& & & \\ & \text{share fully paid up)}& & & \\ & \underset{–}{}& & & \\ & \text{Forfeited Shares A/c}(18,000-4,800)Dr.& & 13,200& \\ & \text{To Capital Reserve A/c}& & & 13,200\\ & \text{(Being profit on re-issue, i.e., balance of forfeited shares}& & & \\ & \text{account transferred to capital reserve)}& & & \end{array}$

Working Notes:

*Shares allotted to Manu $=\frac{1,20,000}{1,50,000}\times 3,000$

=2,400 shares

Application money received $(3,000\times 2)=6,000$

Amount adjusted on application $(2,400\times 2)=\underset{–}{4,800}$

Excess money received on application $=\underset{–}{1,200}$

Money due on allotment $(2,400\times 5)=12,000$

Less: Excess money adjusted =12,000 -1,200

Money not paid by Manu=10,800

money due on allotment = 6,00,000

Application money adjusted =6,00,000 -60,000 =5,40,000

Less: Money not paid by Manu (as calculated above)=10,800

Allotment money received =5,29,200