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Question

Amisha Ltd inviting application for 40,000 shares of 100 each at a premium of Rs. 20 per share payable on application; Rs. 40 on allotment; Rs. 40 (Including Premium) on first call Rs. 25 and, second and final call Rs. 15.
Application were received for 50,000 shares and allotment was made on pro-rata basis. Excess money on application was adjusted on sums due on allotment.
Rohit to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited after allotment. Ashmita, who applied for 1,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the shares forfeited, 1,200 shares were sold to Kapil for Rs. 85 per share as fully paid, the whole of Rohit's shares being included. Record necessary journal entries.

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Solution

DateParticularsLFAmt.(Dr)mt.(Cr)(i)Bank A/cDr20,00,000 To Share Application A/c20,00,000(Share application money received on 50,000 shares @ 40 per share) –––––––––––––––––––––––––––––––––––––––––––––(ii)Share Application A/cDr20,00,000 To Share Capital A/c(40,000×40)16,00,000 To Share Allotment A/c(10,000×40)4,00,000(Share application money adjusted) –––––––––––––––––––––––––––––––––––––––––––––(iii)Bank A/c (Working Note) Dr11,82,000 To Share Allotment A/c11,82,000(Share allotment money receviedexcept 600 shares) –––––––––––––––––––––––––––––––––––––––––––––(iv)Share Allotment A/cDr16,00,000 To Share Capital A/c(40,000×20)8,00,000 To Securities Premium A/c(40,000×20)8,00,000(Share allotment money includingpremium trasferred to capital and premium account) –––––––––––––––––––––––––––––––––––––––––––––(v)Share Capital A/c (600×60)Dr36,000Share Premium A/c (600×20)12,000 To Share Allotment A/c (Working Note)18,000 To Share Forfeiture A/c (Working Note)30,000(600 shares forfeited after allotment) –––––––––––––––––––––––––––––––––––––––––––––(vi)Bank A/c (38,600×25)Dr9,65,000 To Share First Call A/c9,65,000(First call money received except 800 shares) –––––––––––––––––––––––––––––––––––––––––––––(vii)Share First Call A/cDr9,85,000 To Share Capital A/c (39,400×25)9,85,000(First call money transferred to share capital account) –––––––––––––––––––––––––––––––––––––––––––––(viii)Bank A/c (38,600×15)Dr5,79,000 To Share Second and Final Call A/c5,79,000(Second and final call money recevied except800 shares) –––––––––––––––––––––––––––––––––––––––––––––(ix)Share Second and Final Call A/cDr5,91,000 To Share Capital A/c(39,400×15)5,91,000(Second and final call money transferred toshare capital account) –––––––––––––––––––––––––––––––––––––––––––––(x)Share Capital A/c (800×100)Dr80,000 To Share First Call A/c (800×25)20,000 To Share Second and Final Call A/c (800×15)12,000 To Share Forfeiture A/c (800×60)48,000(800 shares forfeited for non payment of twocalls) –––––––––––––––––––––––––––––––––––––––––––––(xi)Bank A/c (1,200×85)Dr1,02,000Share Forfeiture A/c (1,200×15)Dr18,000 To Share Capital A/c (1,200×100)1,20,000(1200 shares reissued @ Rs 85 per share fullypaid-up) –––––––––––––––––––––––––––––––––––––––––––––(xii)Share Forfeiture A/c (Working Note) Dr48,000 To Capital Reserve A/c48,000(Balance amount after reissue from share forfeitureaccount transferred to capital reserve)

Working Note:

(i) Calculation of Amount received on Allotment Number of shares applied by Rohit =Total shares appliedTotal shares alloted×Shared Allotted =50,00040,000×600 = 750 shares

Arrear of Rohit on Allotment Money received on application (750×40)=30,000(-) Money adjusted on application (600×40)=(24,000)––––––––Allotment advance 6,000Rohit money due on Allotment (600×40) ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯24,000(-) Allotment advance (6,000)––––––Rohit's arrear on allotment 18,000––––––Total Money to be received in AllotmentAllotment money transferred to share capital account (40,000×40) 16,00,000(-) Allotment advance on application (4,00,000)–––––––––– 12,00,000(-) Rohit's arrear of allotment (18,000)––––––––Amount received on allotment 11,82,000–––––––––

(ii) Calculation of Capital Reserve:

(a) On Rohit's 600 Shares Reissued

Amount transferred to share forfeiture (750×40)=30,000(-) Amount adjusted on reissue (600×15)= 9,000––––Rohit's transfer to capital reserve 21,000––––––

(b) On 600 Shares of Ashmita Reissued

Number of share allotted

=Total shares allotedTotal shares applied×Shares applied =40,00050,000×1,000=800 shares

Amount transferred to share forfeiture on 600=36,000share forfeiture (600×600)(-) Amount adjusted on reissue 600 shares=(9,000)(600×15)Ashmita's transfer to capital reserve ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯27,000––––––Hence total capital reserve=21,000+27,000 =Rs 48,000

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R.K.Ltd., invited applications for issuing 80,000 equity shares of Rs 10 each at a premium of Rs 35 per share. The amount was payable as follows:
On Application Rs 8 (including Rs 5 premium) per share.
On Allotment Rs 12 (including Rs 10 premium) per share.

On First and Final Call Balance.

Application for 75,000 shares were received and allotment was made to all the applicants. Rahim, a shareholder who was allotted 3,000 shares failed to pay allotment money and his shares were immediately forfeited. Afterwards, the first and final call was made. Suhani who held 3,000 shares failed to pay the final call. Her shares were also forfeited. All the forfeited shares were re-issued for a sum of Rs 62,000 as fully paid up.

Pass the necessary Journal entries for the above transactions in the books of R.K.Ltd.

OR

Sargam Ltd., invited applications for issuing 80,000 equity shares of Rs 100 each at a premium. The amount was payable as follows :

On Application Rs 20 per share.

On Allotment Rs 60 (including premium) per share.

On First and Final Call Rs 40 per share.

Application for 1,20,000 shares were received. Allotment was made on pro-rata basis to all the applicants. Excess money received on applications was adjusted on sums due to allotment. Sitaram, who had applied for 6,000 shares failed to pay the allotment money and Harnam did not pay first and final call on 800 shares allotted to him. The shares of Sitaram and Harnam were forfeited. 4,200 of these shares were re-issued for Rs 100 per share as fully paid up. The re-issued shares included all the forfeited shares of Harnam.

Pass necessary Journal entries for the above transactions in the books of Sargam Ltd.

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