Question

H Limited issued a prospectus inviting applications for 20,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as follows:
On application ₹ 2 ; on allotment ₹ 5 (including premium) ; on first call ₹ 3 ; on second and final call ₹ 2.

Applications were received for 30,000 shares and pro rata allotment was made on the applications for 24,000 shares. Money overpaid on applications was adjusted against amount due on allotment.

Ramesh, to whom 400 shares were allotted , failed to pay the allotment money and on his subsequent failure to pay first call his shares were forfeited . Mohan , the holder of 600 shares, failed to pay two calls and his shares were forfeited after the second call.

Of the shares forfeited, 800 shares were sold to Krishna credited as fully paid-up for ₹ 9 per share, the whole of Ramesh's shares being included .
Pass journal entries and prepare the Balance Sheet.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Bank A/c (30,000$\times$2)	Dr.		60,000
	To Share Application A/c				60,000
	(Application money received)
	Share Application A/c	Dr.		60,000
	To Share Capital A/c (20,000$\times$2)				40,000
	To Share Allotment A/c (4,000$\times$2)				8,000
	To Bank A/c (6,000$\times$2)				12,000
	(Application money adjusted to share capital carried to allotment and also refunded)
	Share Allotment A/c (20,000$\times$5)	Dr.		1,00,000
	To Share Capital A/c (20,000$\times$3)				60,000
	To Securities Premium Reserve A/c (20,000$\times$2)				40,000
	(Allotment money due along with premium)
	Bank A/c	Dr.		90,160
	To Share Allotment A/c (1,00,000–8,000–1,840)				90,160
	(Allotment money received)
	Share First Call A/c (20,000$\times$3)	Dr.		60,000
	To Share Capital A/c				60,000
	(First call money due)
	Bank A/c (19,000$\times$3)	Dr.		57,000
	To Share First Call A/c				57,000
	(Call money received)
	Share Capital A/c (400$\times$8)	Dr.		3,200
	Securities Premium Reserve A/c (400$\times$2)	Dr.		800
	To Share Allotment A/c				1,840
	To Share First Call A/c (400$\times$3)				1,200
	To Share Forfeiture A/c (480$\times$2)				960
	(400 share forfeited for non-payment of allotment and first call money)
	Share Second & Final Call A/c (19,600$\times$2)	Dr.		39,200
	To Share Capital A/c				39,200
	(Second call money due)
	Bank A/c	Dr.		38,000
	To Share Second & Final Call A/c (19,000 $\times$2)				38,000
	(Second call money received)
	Share Capital A/c (600$\times$10)	Dr.		6,000
	To Share First Call A/c (600$\times$3)				1,800
	To Share Second & Final Call A/c (600$\times$2)				1,200
	To Share Forfeiture A/c (600$\times$5)				3,000
	(600 shares forfeited for non-payment of first call and second call)
	Bank A/c (800$\times$9)	Dr.		7,200
	Share Forfeiture A/c (800$\times$1)	Dr.		800
	To Share Capital A/c (800$\times$10)				8,000
	(800 shares reissued @ Rs 9 per share)
	Share Forfeiture A/c	Dr.		2,160
	To Capital Reserve A/c				2,160
	( Profit on reissue transferred to Capital Reserve)

Balance Sheet of H Ltd
Particulars	Note No.	Amount (Rs)
1. Equity and Liabilities
Shareholders’ Funds
a. Share Capital	1	1,99,000
b. Reserves and Surplus	2	41,360
Total		2,40,360
2. Assets
Current Assets
a. Cash and Cash Equivalents	3	2,40,360
Total		2,40,360

Notes to Accounts
Particulars		Amount (Rs)
1. Share Capital
Issued Share Capital
20,000 Shares of Rs 10 each		2,00,000
Subscribed, Called-up & Paid-up Share Capital
19,800 Shares of Rs 10 each	1,98,000
Add: Share Forfeited (200$\times$5)	1,000	1,99,000
2. Reserves and Surplus
Securities Premium Reserve (19,600$\times$2)		39,200
Capital Reserve		2,160
		41,360
3. Cash and Cash Equivalents
Bank		2,40,360

Working Notes:

WN1 Calculation of Amount Received on Allotment

WN2 Calculation of Share Forfeiture transferred to Capital Reserve