Arti Ltd. offered for subscription 20,000 shares of ₹ 10 each payable ₹ 3 on application, ₹ 5 on allotment and balance on first and final call. Applications were received for 30,000 shares. Letters of regret were issued to applicants for 5,000 shares and their application money was refunded. Application money for other 5,000 shares was applied towards the payment for allotment money. The balance of allotment money was also received in due time. Company didn't make first and final call.
You are to prepare the Journal, Cash Book, Ledger Accounts and show 'Share Capital' in the Balance Sheet of the company.

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Solution

Issued Capital

20,000 shares at ₹ 10 each

Applied

30,000 shares

Over-subscribed

10,000 shares

Applied

Allotted

Over-subscribed

25,000

20,000

5,000

5,000

NIL

5,000

30,000

20,000

10,000

Payable as:

₹

3

on application

₹

5

on allotment

8

Called-up

Books of Arti Limited
Cash Book

Dr.

Cr.

Date

Particulars

L.F.

Bank

(₹)

Date

Particulars

L.F.

Bank

(₹)

Share Application

Share Application

(30,000 shares × Rs 3)

90,000

(5,000 shares × Rs 3)

15,000

Share Allotment

85,000

Balance c/d

1,60,000

1,75,000

1,75,000

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit Amount

(₹)

Share Application A/c

Dr.

75,000

To Share Capital A/c

60,000

To Share Allotment A/c

15,000

(Share application of 20,000 shares at Rs 3 each transferred to Share Capital Account and excess money Rs 15,000 transferred to allotment)

Share Allotment A/c

Dr.

1,00,000

To Share Capital A/c

1,00,000

(Share allotment due on 20,000 shares at Rs 5 each)

Arti Limited

Balance Sheet

Particulars

Note No.

Amount

(₹)

I. Equity and Liabilities

1. Shareholders’ Funds

a. Share Capital

1

1,60,000

2. Non-Current Liabilities

3. Current Liabilities

Total

1,60,000

II. Assets

1. Non-Current Assets

2. Current Assets

a. Cash and Cash Equivalents

2

1,60,000

Total

1,60,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount (₹)

1

Share Capital

Authorised Share Capital

…… shares of Rs 10 each

–

Issued Share Capital

20,000 shares of Rs 10 each

2,00,000

Subscribed, Called-up and Paid-up Share Capital

20,000 shares of Rs 10 each, on which Rs 8 called-up and paid-up

1,60,000

2

Cash and Cash Equivalents

Cash at Bank

1,60,000

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Arti Limited
Balance Sheet
Particulars	Note No.	Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,60,000
2. Non-Current Liabilities
3. Current Liabilities
Total		1,60,000

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	2	1,60,000
Total		1,60,000

Issued Capital	20,000 shares at ₹ 10 each
Applied	30,000 shares
Over-subscribed	10,000 shares

Applied	Allotted	Over-subscribed
25,000	20,000	5,000
5,000	NIL	5,000
30,000	20,000	10,000

Books of Arti Limited Cash Book
Dr.								Cr.
Date	Particulars	L.F.	Bank (₹)	Date	Particulars	L.F.	Bank (₹)

	Share Application				Share Application
	(30,000 shares × Rs 3)		90,000		(5,000 shares × Rs 3)		15,000
	Share Allotment		85,000
					Balance c/d		1,60,000
			1,75,000				1,75,000

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

	Share Application A/c	Dr.		75,000
	To Share Capital A/c				60,000
	To Share Allotment A/c				15,000
	(Share application of 20,000 shares at Rs 3 each transferred to Share Capital Account and excess money Rs 15,000 transferred to allotment)

	Share Allotment A/c	Dr.		1,00,000
	To Share Capital A/c				1,00,000
	(Share allotment due on 20,000 shares at Rs 5 each)


Note No.	Particulars	Amount (₹)
1	Share Capital
	Authorised Share Capital
	…… shares of Rs 10 each	–
	Issued Share Capital
	20,000 shares of Rs 10 each	2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	20,000 shares of Rs 10 each, on which Rs 8 called-up and paid-up	1,60,000

2	Cash and Cash Equivalents
	Cash at Bank	1,60,000