Better Prospect Ltd. acquired land costing ₹ 1,00,000 and in payment allotted 1,000 Equity Shares of ₹ 100 each as fully paid. Further, the company issued 4,000 Equity Shares to public . The shares were payable as: ₹ 30 on application ; ₹ 30 on allotment; ₹ 40 on first and final call.
Applications were received for all shares which were allotted . All the money was received except the call on 200 shares.
Pass journal entries and prepare Balance Sheet of the company.

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Solution

Issued to public payable as:

Rs

30

on application

Rs

30

on allotment

Rs

40

first and final call

Rs

100

Called-up

Books of Better Prospect Ltd.

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Land A/c

Dr.

1,00,000

To Vendor

1,00,000

(Land purchased from the vendor)

Vendor

Dr.

1,00,000

To Equity Share Capital A/c

1,00,000

(1,000 equity of Rs 100 each issued to Vendor)

Bank A/c

Dr.

1,20,000

To Equity Share Application A/c

1,20,000

(Share Application money received for 4,000 equity shares at Rs 30 per share)

Equity Share Application A/c

1,20,000

To Equity Share Capital

Dr.

1,20,000

(Share Application money of 4,000 shares transferred to Equity Share Capital Account)

Equity Share Allotment A/c

Dr.

1,20,000

To Equity Share Capital A/c

1,20,000

(Share allotment due on 4,000 equity shares of Rs 30 each)

Bank A/c

Dr.

1,20,000

To Share Allotment A/c

1,20,000

(Share allotment received for 4,000 shares at Rs 30 per share)

Share First and Final Call A/c

Dr.

1,60,000

To Equity Share Capital A/c

1,60,000

(First and final call due on 4,000 equity shares at 40 per share)

Bank A/c

Dr.

1,52,000

Calls-in-Arrears A/c

Dr.

8,000

To Share First and Final Call A/c

1,60,000

(First and final call received from 3,800 shares and 200 share failed to pay it)

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Better Prospect Ltd.

Balance Sheet

Particulars

Note No.

Amount

(Rs)

I. Equity and Liabilities

1. Shareholders’ Funds

a. Share Capital

1

4,92,000

2. Non-Current Liabilities

3. Current Liabilities

Total

4,92,000

II. Assets

1. Non-Current Assets

a. Fixed Assets

i. Tangible Assets

2

1,00,000

2. Current Assets

a. Cash and Cash Equivalents

3

3,92,000

Total

4,92,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Share Capital

Authorised Share Capital

…… shares of Rs 100 each

-

Issued Share Capital

5,000 shares of Rs 100 each

5,00,000

Subscribed, Called-up and Paid-up Share Capital

1,000 shares of Rs 100 each (for consideration other than cash)

1,00,000

4,000 shares of Rs 100 each

4,00,000

Less: Calls-in-Arrears

(8,000)

4,92,000

2

Tangible Assets

Land

1,00,000

3

Cash and Cash Equivalents

Cash at Bank

3,92,000

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Rs	30	on application
Rs	30	on allotment
Rs	40	first and final call
Rs	100	Called-up

Books of Better Prospect Ltd. Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Land A/c	Dr.		1,00,000
	To Vendor				1,00,000
	(Land purchased from the vendor)

	Vendor	Dr.		1,00,000
	To Equity Share Capital A/c				1,00,000
	(1,000 equity of Rs 100 each issued to Vendor)

	Bank A/c	Dr.		1,20,000
	To Equity Share Application A/c				1,20,000
	(Share Application money received for 4,000 equity shares at Rs 30 per share)

	Equity Share Application A/c			1,20,000
	To Equity Share Capital	Dr.			1,20,000
	(Share Application money of 4,000 shares transferred to Equity Share Capital Account)

	Equity Share Allotment A/c	Dr.		1,20,000
	To Equity Share Capital A/c				1,20,000
	(Share allotment due on 4,000 equity shares of Rs 30 each)

	Bank A/c	Dr.		1,20,000
	To Share Allotment A/c				1,20,000
	(Share allotment received for 4,000 shares at Rs 30 per share)

	Share First and Final Call A/c	Dr.		1,60,000
	To Equity Share Capital A/c				1,60,000
	(First and final call due on 4,000 equity shares at 40 per share)

	Bank A/c	Dr.		1,52,000
	Calls-in-Arrears A/c	Dr.		8,000
	To Share First and Final Call A/c				1,60,000
	(First and final call received from 3,800 shares and 200 share failed to pay it)

Better Prospect Ltd.
Balance Sheet
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	4,92,000
2. Non-Current Liabilities
3. Current Liabilities
Total		4,92,000

II. Assets
1. Non-Current Assets
a. Fixed Assets
i. Tangible Assets	2	1,00,000
2. Current Assets
a. Cash and Cash Equivalents	3	3,92,000
Total		4,92,000