Question

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.

Answer 1

Bayson Ltd.

JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & & & & \text{Rs}& \text{Rs}\\ & \text{Bank A/c}& \text{Dr.}& & 40,00,000& \\ & \text{To Equity Share Application A/c}& & & & 40,00,000\\ & \text{(Application money received)}& & & & \\ & \text{Equity Share Application A/c}& \text{Dr.}& & 40,00,000& \\ & \text{To Equity Share Capital A/c}& & & & 27,00,000\\ & \text{To Equity Share Allotment A/c}& & & & 4,00,000\\ & \text{To Calls in Advance A/c (Note 1)}& & & & 9,00,000\\ & \text{(Application money transferred)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 1,88,000& \\ & \text{To Equity Share Allotment A/c}& & & & 1,40,000\\ & \text{To Calls in Advance A/c (1,200 Shares)}\times \text{Rs 40}& & & & 48,000\\ & \text{(Allotment money received alongwith calls in}& & & & \\ & \text{advance on 1,200 shares)}& & & & \\ & \text{Equity Share Allotment A/c}& \text{Dr.}& & 5,40,000& \\ & \text{To Equity Share Capital A/c}& & & & 5,40,000\\ & \text{(Share allotment made due on 54,000 shares @ Rs 10)}& & & & \\ & \text{Bank A/c (Note 3)}& \text{Dr.}& & 12,05,000& \\ & \text{Calls in Advance A/c (Rs 9,00,000 + Rs 48,000)}& \text{Dr.}& & 9,48,000& \\ & \text{Calls in Arrears A/c}& \text{Dr.}& & 7,000& \\ & \text{To Equity Share First and Final Call A/c}& & & & 21,60,000\\ & \text{(First and Final Call money received)}& & & & \\ & \text{Equity Share First and Final Call A/c}& \text{Dr.}& & 21,60,000& \\ & \text{To Equity Share Capital A/c}& & & & 21,60,000\\ & \text{(First and Final Call due on 54,000 shares @ Rs 40)}& & & & \\ & \text{Equity Share Capital A/c}& \text{Dr.}& & 40,000& \\ & \text{To Calls in Arrears A/c}& & & & 7,000\\ & \text{To Forfeited Shares A/c}& & & & 33,000\\ & \text{(400 shares of Vidur forfeited)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 44,000& \\ & \text{To Equity Share Capital A/c}& & & & 40,000\\ & \text{To Securities Premium Reserve A/c}& & & & 4,000\\ & \text{(400 Shares reissued @ Rs 110 per share fully paid up)}& & & & \\ & \text{Forfeited Shares A/c}& \text{Dr.}& & 33,000& \\ & \text{To Capital Reserve A/c}& & & & 33,000\\ & \text{(Gain on reissued shares transferred to Capital Reserve)}& & & & \end{array}$

Working Notes :

(1) Applictions were received for 80,000 shares and applicants for 14,000 shares were made full allotment.Hence,applicants for 66,000 shares were allotted=40,000 shares.

$\begin{array}{ccc}& & \text{Rs}\\ \text{Excess application money received =(66,000 -40,000)}\times \text{Rs 50}& =& 13,00,000\\ \text{Less: Adjusted on Allotment:40,000 Shares}\times \text{Rs 10}& =& 4,00,000\\ \text{Amount transferred to Calls in Advance A/c}& & \overline{\underset{–}{\underset{–}{9,00,000}}}\end{array}$

$\begin{array}{ccc}& & \text{Rs}\\ \text{(2) Total Amount money due}& & 5,40,000\\ \text{Less: Already received at the time of application}& & 4,00,000\\ \text{Net Amount due on Allotment}& & \overline{\underset{–}{\underset{–}{1,40,000}}}\end{array}$

$\begin{array}{ccccc}\text{(3)}& \text{(a)}& \text{Shares applied by Vidur=}\frac{66,000}{40,000}\times 400\text{Shares=660 Shares}& & \text{Rs}\\ & & \text{Excess application money received from him=660 - 400=260 Shares}\times \text{Rs 50}& =& 13,000\\ & & \text{Less : Adjusted on Allotment=400 Shares}\times \text{Rs 10}& =& 4,000\\ & & \text{Calls in Advance from Vidur}& & \overline{\underset{–}{\underset{–}{9,000}}}\\ & & & & \\ & \left(b\right)& \text{Amount due from Vidur on First And Final Call=400}\times \text{Rs 40}& =& 16,000\\ & & \text{Less: Calls in Advance from Vidur}& =& 9,000\\ & & \text{Amount not paid by Vidur on First and Final Call}& & \overline{\underset{–}{\underset{–}{7,000}}}\end{array}$

$\begin{array}{ccccc}& & & & \text{Rs}\\ & \text{(c)}& \text{Total Amount due on First and Final call: 54,000 Shares}\times \text{Rs 40}& =& 21,60,000\\ & & \text{Less: Amount transferred to Calls in Advance (9,00,000+48,000)}& =& 9,48,000\\ & & & & \overline{12,12,000}\\ & & \text{Less: Not received from Vidur on First and Final Call}& & 7,000\\ & & & & \overline{\underset{–}{\underset{–}{12,05,000}}}\end{array}$