Commence Publications Ltd. issued 50,000 Equity Shares of ₹ 10 each at a premium of 10% payable as under:

On application ₹ 2, On first call ₹ 2,

On allotment ₹ 5, On final call ₹ 2.

The calls were made by the company and all the money was duly received except the allotment and call money on 500 shares. These shares were, therefore, forfeited and later reissued @ ₹ 9 per share as fully paid-up.
Pass necessary journal entries to record the above transactions.

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Solution

Issued and applied 50,000 equity shares at Rs 10 each at a premium Re 1

Application

Rs

2

Allotment

Rs

5

(4+1)

First Call

Rs

2

Final Call

Rs

2

Rs

11

(10+1) called-up

Books of Commerce Publications Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Bank A/c

Dr.

1,00,000

To Equity Share Application A/c

1,00,000

(Share application received for 50,000 shares at Rs 2 each)

Equity Share Application A/c

Dr.

1,00,000

To Equity Share capital A/c

1,00,000

(Share application money transferred to Share Capital)

Equity Share Allotment A/c

Dr.

2,50,000

To Equity Share Capital A/c

2,00,000

To Securities Premium A/c

50,000

(Share allotment due on 50,000 shares at Rs 5 each including Re1 premium)

Bank A/c

Dr.

2,47,500

Calls-in-Arrears A/c

Dr.

2,500

To Equity Share Allotment

2,50,000

(Share allotment at Rs 5 each, received on 49,500 shares and holders of 500 shares failed to pay it)

Equity Share First Calls A/c

Dr.

1,00,000

To Equity Share capital

1,00,000

(First call due on 50,000 shares at Rs 2 each)

Bank A/c

Dr.

99,000

Calls-in-Arrears A/c

Dr.

1,000

To Equity Share first call A/c

1,00,000

(First call received on 49,500 shares and 500 shares failed to pay it)

Equity Shares capital A/c

Dr.

4,000

Securities Premium A/c

Dr.

500

To Share Forfeiture

1,000

To Calls-in-Arrears A/c

3,500

(500 shares forfeited for the non-payment of Rs 7 including Re 1 premium)

Equity Share Final Call A/c

Dr.

99,000

To Equity Share Capital A/c

99,000

(Share final call due 49,500 share at Rs 2 each)

Bank A/c

Dr.

99,000

To Equity Share Final Call A/c

99,000

(Share final call money received)

Bank A/c

Dr.

4,500

Share Forfeiture A/c

Dr.

500

To Equity Share Capital A/c

5,000

(500 shares of Rs10 each reissued for Rs 9 per share as fully paid-up)

Share Forfeiture A/c

Dr.

500

To Capital Reserve A/c

500

(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

Working Note:

Share Forfeiture Credit

1,000

Less: Share Forfeiture Debit

500

Balance in Share Forfeiture (after re-issue)

500

Capital Reserve = Balance in Share Forfeiture (after re-issue)

= Rs 500

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On application	₹ 2,	On first call	₹ 2,
On allotment	₹ 5,	On final call	₹ 2.

Application	Rs	2
Allotment	Rs	5	(4+1)
First Call	Rs	2
Final Call	Rs	2
	Rs	11	(10+1) called-up

Books of Commerce Publications Ltd. Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Bank A/c	Dr.		1,00,000
	To Equity Share Application A/c				1,00,000
	(Share application received for 50,000 shares at Rs 2 each)

	Equity Share Application A/c	Dr.		1,00,000
	To Equity Share capital A/c				1,00,000
	(Share application money transferred to Share Capital)

	Equity Share Allotment A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,00,000
	To Securities Premium A/c				50,000
	(Share allotment due on 50,000 shares at Rs 5 each including Re1 premium)

	Bank A/c	Dr.		2,47,500
	Calls-in-Arrears A/c	Dr.		2,500
	To Equity Share Allotment				2,50,000
	(Share allotment at Rs 5 each, received on 49,500 shares and holders of 500 shares failed to pay it)

	Equity Share First Calls A/c	Dr.		1,00,000
	To Equity Share capital				1,00,000
	(First call due on 50,000 shares at Rs 2 each)

	Bank A/c	Dr.		99,000
	Calls-in-Arrears A/c	Dr.		1,000
	To Equity Share first call A/c				1,00,000
	(First call received on 49,500 shares and 500 shares failed to pay it)

	Equity Shares capital A/c	Dr.		4,000
	Securities Premium A/c	Dr.		500
	To Share Forfeiture				1,000
	To Calls-in-Arrears A/c				3,500
	(500 shares forfeited for the non-payment of Rs 7 including Re 1 premium)

	Equity Share Final Call A/c	Dr.		99,000
	To Equity Share Capital A/c				99,000
	(Share final call due 49,500 share at Rs 2 each)

	Bank A/c	Dr.		99,000
	To Equity Share Final Call A/c				99,000
	(Share final call money received)

	Bank A/c	Dr.		4,500
	Share Forfeiture A/c	Dr.		500
	To Equity Share Capital A/c				5,000
	(500 shares of Rs10 each reissued for Rs 9 per share as fully paid-up)

	Share Forfeiture A/c	Dr.		500
	To Capital Reserve A/c				500
	(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

Share Forfeiture Credit	1,000
Less: Share Forfeiture Debit	500
Balance in Share Forfeiture (after re-issue)	500