Question

Raunak Cotton Ltd. issued a prospectus inviting applications for 6,000 equity shares of Rs 100 each at a premium of Rs 20 per shares, payable as follows:

On application	Rs 20
On allotment	Rs 50 (including premium)
On first call	Rs 30
On final call	Rs 20

Applications were received for 10,000 shares and allotment was made Pro-rata to the applicants of 8,000 shares, the remaining applications Being refused. Money received in excess on the application was adjusted toward the amount due on allotment.

Rohit, to whom 300 shares were allotted failed to pay allotment and calls money, his shares were forfeited. Itika, who applied for 600 shares, failed to pay the two calls and her share were also forfeited. All these shares were sold to Kartika as fully paid for Rs 80 per shares.

Give journal entries in the books of the company.

Answer 1

Books of Raunak Cotton Ltd.
Date	Particulars					L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c				Dr.		2,00,000
				To Share Application A/c				2,00,000
	(Share Application money received on 10,000 shares)
	Share Application A/c				Dr.		2,00,000
				To Share Capital A/c				1,20,000
				To Share Allotment A/c				40,000
				To Bank				40,000
	(Share Application money adjusted)
	Share Allotment A/c				Dr.		3,00,000
				To Share Capital A/c				1,80,000
				To Share Premium A/c				1,20,000
	(Share allotment money due)
	Bank A/c				Dr.		2,47,000
				To Share Allotment A/c				2,47,000
	(Allotment money received except 300 shares)
	Share First Call A/c				Dr.		1,80,000
				To Share Capital A/c				1,80,000
	(Share First Call money due)
	Bank A/c				Dr.		1,57,500
			To Share First Call A/c					1,57,500
	(Share First Call money received except 750 (300+450 shares)
	Share Final Call A/c				Dr.		1,20,000
			To Share Capital A/c					1,20,000
	(Share Final Call money is due)
	Bank A/c				Dr.		1,05,000
			To Share Final Call					1,05,000
	(Share Final Call money received except 750 shares)
	Share Capital A/c (750×100)				Dr.		75,000
	Share Premium A/c (300×20)				Dr.		6,000
			To Share Allotment A/c					13,000
			To Share first call A/c (750×30)					22,500
			To Share final call A/c (750×20)					15,000
			To Share Forfeiture A/c					30,500
	(750 shares were forfeited)
	Bank A/c				Dr.		60,000
	Share Forfeiture A/c				Dr.		15,000
		To Share Capital A/c						75,000
	(Forfeited shares reissued @ 80 per share)
	Share Forfeiture A/c				Dr.		15,500
		To Capital Reserve A/c						15,500
	(Share Forfeiture Account transferred capital reserve)

Working Note:

2. Call in arrears by Rohit on allotment

Money received on Application		(400×20)	8,000
	Less: Transferred to share capital	(300×20)	6,000
Excess adjusted on allotment			2,000
Allotment due		(300×50)	15,000
	Less: Excess adjustment on allotment		2,000
Call in arrear			13,000

4. Share Forfeiture amount

Amount on application
	300×20	6,000
	450×20	9,000
Excess amount received from Rohit for allotment on pro-rata basis		2,000
Amount received on Allotment by Kartika		13,500
		30,500