Question

Chandra Ltd. issued 15,000 Preference shares of Rs 100 each at a premium of $5\%$. Payments were to be made as --- Rs 25 on Application; Rs 45 on Allotment and Rs 35 on First and Final Call.

The Applications for 14,000 shares were received and all were accepted. All the money was duly received except the first and final call on 200 shares.

Give the necessary Journal Entries and prepare Cash Book of the Company.

Answer 1

$\text{Dr}\text{CASH BOOK (Bank Column)}\text{Cr}$

$\begin{array}{cccc}\text{Particulars}& \text{Rs.}& \text{Particulars}& \text{Rs.}\\ \text{Preference Share Application A/c}& 3,50,000& \text{Balance c/d}& 14,63,000\\ \text{Preference Share Allotment A/c}& 6,30,000& & \\ \text{Preference Share First And Final Call A/c}& 4,83,000& & \\ & \overline{\underset{–}{\underset{–}{14,63,000}}}& & \overline{\underset{–}{\underset{–}{14,63,000}}}\end{array}$

$\text{JOURNAL}$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Preference Share Application A/c}& \text{Dr.}& & 3,50,000& \\ & \text{To Preference Share Capital A/c}& & & & 3,50,000\\ & \text{(Application money transferred to capital A/c)}& & & & \\ & \text{Preference Share Allotment A/c}& \text{Dr.}& & 6,30,000& \\ & \text{To Preference Share Capital A/c}& & & & 5,60,000\\ & \text{To Securities Premium Share Capital A/c*}& & & & 70,000\\ & \text{(Allotment money transfer to share capital )}& & & & \\ & \text{and securities premium A/c)}& & & & \\ & \text{Preference Share First and Final Call A/c}& \text{Dr.}& & 4,90,000& \\ & \text{To Preference Share Capital A/c}& & & & 4,90,000\\ & \text{(First call account transfer to share capital A/c)}& & & & \\ & \text{Calls in Arrears A/c}& \text{Dr.}& & 7,000& \\ & \text{To Preference Share First and Final Call A/c}& & & & 7,000\\ & \text{(First and Final Call @ Rs 35 per share unpaid on 200 shares)}& & & & \end{array}$

*It will be assumed that the securities premium is due along with allotment.