Question

Eastern Company Limited , having an authorised capital of ₹ 10,00,000 divided into shares of ₹ 10 each , issued 50,000 shares at a premium of ₹ 3 per share payable as follows:

On Application	₹ 3 per share;
On Allotment (including premium)	₹ 5 per share;
On first call (due three months after allotment )and the balance as when required.	₹ 3 per share;

Applications were received for 60,000 shares and the directors allotted the shares as follows:
(i) Applicants for 40,000 shares received in full.
(ii) Applicants for 15,000 shares received an allotment of 8,000 shares.
(iii) Applicants for 5,000 shares received 2,000 shares on allotment , excess money being returned.
All amounts due on allotment were received.
The first call was made and the money was received except on 100 shares.
Give journal and cash book entries to record these transactions of the company . Also prepare the Balance Sheet of the company.

Answer 1

Books of Eastern Company Limited
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Share Application A/c	Dr.		1,80,000
	To Share Capital A/c				1,50,000
	To Share Allotment A/c				30,000
	(Share Application money for 50,000 shares transferred To Share Capital Account and the excess money transferred To Share Allotment Account)
	Share Allotment A/c	Dr.		2,50,000
	To Share Capital A/c				1,00,000
	To Share Premium A/c				1,50,000
	(Allotment money due on 50,000 shares @ Rs 5 per share including Rs 3 security premium)
	Share First Call A/c	Dr.		1,50,000
	To Share Capital A/c				1,50,000
	(First call due on 50,000 shares @ Rs 3 per share)

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
	Share Application		1,80,000
	Share Allotment		2,20,000		Balance c/d		5,49,700
	Share First Call		1,49,700
			5,49,700				5,49,700

Eastern Company Limited
Balance Sheet
Particulars	Note No.	Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	3,99,700
b. Reserves and Surplus	2	1,50,000
2. Non–Current Liabilities
3. Current Liabilities
Total		5,49,700
II. Assets
1. Non–Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	5,49,700
Total		5,49,700

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (₹)
1	Share Capital
	Authorised Share Capital
	1,00,000 shares of Rs 10 each		10,00,000
	Issued Share Capital
	50,000 shares of Rs 10 each		5,00,000
	Subscribed, Called up and Paid up Share Capital
	50,000 shares of Rs 10 each, Rs 8 called–up	4,00,000
	Less: Calls–in–Arrears	(300)	3,99,700
2	Reserves and Surplus
	Securities Premium		1,50,000
3	Cash and Cash Equivalents
	Cash at Bank		5,49,700