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Question

Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:
On application ₹ 2 per share,
On allotment ₹ 5 per share(including premium),
On first and final call Balance.

Applications for 1,50,000 shares were received . Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment . All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call . Shares of both Manu and Madhur were forfeited . The forfeited shares were reissued at ₹ 9 per share as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.

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Solution

In the books of Jeevan Dhara Ltd.

Journal Entry

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Bank A/c

Dr.

3,00,000

To Equity Share Application A/c

3,00,000

(Application money received on 1,50,000 shares)

Equity Share Application A/c

Dr.

3,00,000

To Equity Share Capital A/c

2,40,000

To Equity Share Allotment A/c

60,000

(Amount of application transferred to Share Capital and excess money is adjusted towards allotment)

Equity Share Allotment A/c

Dr.

6,00,000

To Equity Share Capital A/c

3,60,000

To Securities Premium A/c

2,40,000

(Amount due on allotment)

Bank A/c

Dr.

5,29,200

To Equity Share Allotment A/c

5,29,200

(Amount received on share allotment)

Equity Share First and Final Call A/c

Dr.

6,00,000

To Equity Share Capital A/c

6,00,000

(Amount due on first and final call)

Bank A/c

Dr.

5,76,000

To Equity Share First and Final Call A/c

5,76,000

(Amount received on first and final call)

Equity Share Capital A/c

Dr.

48,000

Securities Premium A/c

Dr.

4,800

To Equity Share Forfeiture A/c

18,000

To Equity Share Allotment A/c

10,800

To Equity Share First and Final Call A/c

24,000

(Shares of Manu and Madhur were forfeited)

Bank A/c

Dr.

43,200

Equity Share Forfeiture A/c

Dr.

4,800

To Equity Share Capital A/c

48,000

(Forfeited shares were reissued for Rs 9 as fully paid-up)

Equity Share Forfeiture A/c

Dr.

13,200

To Capital Reserve A/c

13,200

(Excess amount on forfeiture is transferred to capital reserve)

Working Notes:

WN1: Calculation of Amount not received on Allotment and First and Final Call

WN2: Calculation of amount not received from Madhur


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Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each. The amount was payable as follows :

On applications and allotment - Rs 4 per share.

On First Call - Rs 3 per share.

On Second and Final Call - Balance.

Application for 1,00,000 shares were received. Shares were allotted to the applicants on pro-rata basis and excess money received with applications was transferred towards sums due on first call.

Vibha who was allotted 750 share failed to pay the first call. Her shares were immediately forfeited. Afterwards, the second call was made. The amount due on second call was also received except on 1,000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were re-issued to Mohit For Rs 9,000 as fully paid up. Pass necessary Journal entries in the books of Alfa Ltd. for the above transactions.

OR

Jeevan Dhara Ltd. Invited applications for issuing 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payble as follows :

On application-Rs 2 per share.

On allotment-Rs 5 (including premium).

On first and final call - Balance.

Application for 1,50,000 shares were received. Shares were allotted to all the applications on pro-rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call. Madhur who was allotted 2,400 Shares failed to pay the first and final call. Shares of both, Manu and Madhur were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass the necessary Journal entries for the above transactions in the books of Jeevan Dhara Ltd.

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