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Reassessment of Liabilities

Kishna Ltd is...

Question

Kishna Ltd issued 15,000 shares of Rs 100 each at a premium of Rs 10 per share, payable as follows:

On application

Rs 30

On allotment

Rs 50 (including premium)

On first and final call

Rs 30

All the shares subscribed and the company received all the money due, With the exception of the allotment and call money on 150 shares. These shares were forfeited and reissued to Neha as fully paid share of Rs 12 each.

Give journal entries in the books of the company.

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Solution

Books of Krishna Ltd

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Bank A/c

Dr.

4,50,000

To Share Application A/c

4,50,000

(Share Application money received for 15,000 shares @ Rs 30 per share)

Share Application A/c

Dr.

4,50,000

To Share Capital A/c

4,50,000

(Share Application money of 15,000 shares transferred to Share

Capital Account)

Share Allotment A/c

Dr.

7,50,000

To Share Capital A/c

6,00,000

To Securities Premium A/c

1,50,000

(Share Allotment money on 15,000 shares @ Rs 50 per share

including Rs 10 securities premium due)

Bank A/c

Dr.

7,42,500

To Share Allotment A/c

7,42,500

(Share Allotment received on 14,850 shares and 150 shares

failed to pay the money due)

Share First and Final Call A/c

Dr.

4,50,000

To Share Capital A/c

4,50,000

(Share First and Final Call for 15,000 shares @ Rs 30 per share due)

Bank A/c

Dr.

4,45,500

To Share First and Final Call A/c

4,45,500

(Share First and Final Call received for 14,850 shares @ Rs 30 per share and 150 shares failed to pay amount due)

Share Capital A/c (150×100)

Dr.

15,000

Share Premium A/c (150×10)

Dr.

1,500

To Share Allotment A/c (150×50)

7,500

To Share First and Final Call A/c (150×30)

4,500

To Share Forfeiture A/c (150×30)

4,500

(150 shares forfeited for non-payment of Share Allotment and Share

First and Final Call )

Bank A/c

Dr.

18,000

To Share Capital A/c

15,000

To Securities Premium A/c

3,000

(150 shares of Rs 100 each reissued @ Rs 120 to Neha)

Share Forfeiture A/c

Dr.

4,500

To Capital Reserve A/c

4,500

(Balance of Share Forfeiture Account transferred to Capital Reserve

Account)

Note: In the solution, the reissued price of Rs 12 has been assumed as Rs 120 per share.

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On application	Rs 30
On allotment	Rs 50 (including premium)
On first and final call	Rs 30

Books of Krishna Ltd
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c		Dr.		4,50,000
		To Share Application A/c				4,50,000
	(Share Application money received for 15,000 shares @ Rs 30 per share)

	Share Application A/c		Dr.		4,50,000
		To Share Capital A/c				4,50,000
	(Share Application money of 15,000 shares transferred to Share Capital Account)

	Share Allotment A/c		Dr.		7,50,000
		To Share Capital A/c				6,00,000
		To Securities Premium A/c				1,50,000
	(Share Allotment money on 15,000 shares @ Rs 50 per share including Rs 10 securities premium due)

	Bank A/c		Dr.		7,42,500
		To Share Allotment A/c				7,42,500
	(Share Allotment received on 14,850 shares and 150 shares failed to pay the money due)

	Share First and Final Call A/c		Dr.		4,50,000
		To Share Capital A/c				4,50,000
	(Share First and Final Call for 15,000 shares @ Rs 30 per share due)

	Bank A/c		Dr.		4,45,500
		To Share First and Final Call A/c				4,45,500
	(Share First and Final Call received for 14,850 shares @ Rs 30 per share and 150 shares failed to pay amount due)

	Share Capital A/c (150×100)		Dr.		15,000
	Share Premium A/c (150×10)		Dr.		1,500
		To Share Allotment A/c (150×50)				7,500
		To Share First and Final Call A/c (150×30)				4,500
		To Share Forfeiture A/c (150×30)				4,500
	(150 shares forfeited for non-payment of Share Allotment and Share First and Final Call )

	Bank A/c		Dr.		18,000
		To Share Capital A/c				15,000
		To Securities Premium A/c				3,000
	(150 shares of Rs 100 each reissued @ Rs 120 to Neha)

	Share Forfeiture A/c		Dr.		4,500
		To Capital Reserve A/c				4,500
	(Balance of Share Forfeiture Account transferred to Capital Reserve Account)