Question

Arti Limited invited applications for issuing 80,000 shares of Rs 10 each at a premium of Rs 4 per share. The amount was payable as follows:
On Application Rs 5 per share.
On Allotment Rs 9 per share (including premium )

Applications were received for 1,40,000 shares.

Allotment was made on the following basis :

(a) To applicants for 80,000 shares - 60,000 shares.
(b) To applicants for 60,000 shares - 20,000 shares.

Money overpaid on application was utilised towards sum due on allotment. Rajiv, who had applied for 1,200 shares was allotted shares under category (a), failed to pay his dues and his shares were forfeited. Later on forfeited shares were re-issued to Mr. Rakesh for Rs 12 per share.
Pass Journal entries in the books of Arti Limited to record the above transactions.

OR

On 1st April, 2017, Logi-tech Ltd. was formed with an authorised capital of Rs 50,00,000 divided into 5,00,000 equity shares of Rs 10 each. The company issued prospectus inviting applications for 4,50,000 equity shares. The company received applications for 4,20,000 equity shares. During the first year Rs 8 per share were called. Amount called was as follows :
On Applications Rs 2 per share; On Allotment Rs 4 per share and On first call Rs 2 per share. Alok holding 1,000 shares and Raju holding 2,000 shares did not pay the first call of Rs 2 per share. Raju's shares were forfeited after the first call and later on 1,500 of the forfeited shares were re-issued at Rs 6 per share, Rs 8 called up. Pass the necessary Journal entries.

Answer 1

JOURNAL

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & \left(\text{Rs}\right)& \left(\text{Rs}\right)\\ & \text{Bank A/c}\text{Dr}& & 7,00,000& \\ & \text{To Equity Share Application A/c}& & & 7,00,000\\ & \underset{–}{\text{(Being application money received)}}& & & \\ & \text{Equity Share Application A/c}\text{Dr}& & 7,00,000& \\ & \text{To Equity Share Capital A/c}& & & 4,00,000\\ & \text{To Equity Share Allotment A/c}& & & 2,80,000\\ & \text{To Bank A/c}& & & 20,000\\ & \underset{–}{\text{(Being application money adjusted)}}& & & \\ & \text{Equity Share Allotment A/c}\text{Dr}& & 7,20,000& \\ & \text{To Equity Share Capital A/c}& & & 4,00,000\\ & \text{To Securities Premium Reserve A/c}& & & 3,20,000\\ & \underset{–}{\text{(Being allotment money due)}}& & & \\ & \text{Bank A/c}\text{Dr}& & 4,33,400& \\ & \text{Calls in Arrears A/c}\text{Dr}& & 6,600& \\ & \text{To Equity Share Allotment A/c}& & & 4,40,000\\ & \underset{–}{\text{(Being allotment money received except on 900 shares of Rajiv)}}& & & \\ & \text{Equity Share Capital A/c}\text{Dr}& & 9,000& \\ & \text{Securities Premium Reserve A/c}\text{Dr}& & 3,600& \\ & \text{To Calls in Arrears A/c}& & & 6,600\\ & \text{To Share Forfeiture A/c}& & & 6,000\\ & \underset{–}{\text{(Being 900 shares of Rajiv forfeited)}}& & & \\ & \text{Bank A/c}\text{Dr}& & 10,800& \\ & \text{To Equity Share Capital A/c}& & & 9,000\\ & \text{To Securities Premium Reserve A/c}& & & 1,800\\ & \underset{–}{\text{(Being forfeited shares re-issued at Rs 12)}}& & & \\ & \text{Share Forfeiture A/c}\text{Dr}& & 6,000& \\ & \text{To Capital Reserve A/c}& & & 6,000\\ & \underset{–}{\text{(Being profit on re-issue transferred to Capital Reserve)}}& & & \end{array}$

On Application of 80,000 shares, 60,000 shares were allotted.

Therefore, on 80,000 shares application money received = 80,000 $\times$ 5 = Rs 4,00,000

Amount adjusted on Application = 60,000 $\times$ 5 = Rs 3,00,000

Excess money adjusted on Allotment = Rs 1,00,000
On Application of 60,000 shares, 20,000 shares were allotted.
Therefore, on 60,000 shares application money received = 60,000 $\times$ 5 = Rs 3,00,000
Amount adjusted on Application = 20,000 $\times$ 5 = Rs 1,00,000
Excess money = Rs 2,00,000

Amount adjusted on Allotment = 20,000 $\times$ 9 = Rs 1,80,000

Since there is no further stage hence balance amount will be refunded Rs 20,000

Ratio applied to allotted shares = $\frac{80,000}{60,000}=4:3$

Rajiv who has applied for 1,200 shares was allotted = 1,200 $\times \frac{3}{4}=900$ shares.

OR
JOURNAL
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ & \text{Bank A/c}& \text{Dr.}& & 8,40,000& \\ & \text{To Equity Share Application A/c}& & & & 8,40,000\\ & \underset{–}{\left(\text{Being application money received}\right)}& & & & \\ & \text{Equity Share Application A/c}& \text{Dr.}& & 8,40,000& \\ & \text{To Equity Share Capital A/c}& & & & 8,40,000\\ & \underset{–}{\text{(Being application money adjusted)}}& & & & \\ & \text{Equity Share Allotment A/c}& \text{Dr.}& & 16,80,000& \\ & \text{To Equity Share Capital A/c}& & & & 16,80,000\\ & \underset{–}{\text{(Being allotment money due)}}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 16,80,000& \\ & \text{To Equity Share Allotment A/c}& & & & 16,80,000\\ & \underset{–}{\text{(Being allotment money received)}}& & & & \\ & \text{Equity Share First Call A/c}& \text{Dr.}& & 8,40,000& \\ & \text{To Equity Share Allotment A/c}& & & & 8,40,000\\ & \underset{–}{\text{(Being first call money received)}}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 8,34,000& \\ & \text{Calls in Arrears A/c}& \text{Dr.}& & 6,000& \\ & \text{To Equity Share Capital A/c}& & & & 8,40,000\\ & \underset{–}{\text{(Being call money received except on 3,000 shares)}}& & & & \\ & \text{Equity Share Capital A/c}& \text{Dr.}& & 16,000& \\ & \text{To Calls in Arrears A/c}& & & & 4,000\\ & \text{To Share Forfeiture A/c}& & & & 12,000\\ & \underset{–}{\text{(Being 2,000 shares forfeited)}}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 9,000& \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & 3,000& \\ & \text{To Equity Share Capital A/c}& & & & 12,000\\ & \underset{–}{\text{(Being 1,500 forfeited shares re-issued)}}& & & & \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & 6,000& \\ & \text{ToCapital Reserve A/c}& & & & 6,000\\ & \text{(Being profit on re-issue transferred to Capital Reserve)}& & & & \\ & (12,000/2,000\times 1,500)-3,000& & & & \end{array}$