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Question

JJK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows:
On Application ₹ 2 per share,
On Allotment ₹ 4 per share; and
On First and Final call
Balance Amount.

The issue was oversubscribed three times. Applications for 30% shares were rejected and money refunded .Allotment was made to the remaining applicants as follows:
Category No . of Shares Applied No. of Shares Allotted
I 80,000 40,000
II 25,000
10,000

Excess money paid by the applicants who were allotted shares was adjusted towards sums due on allotment .
Deepak, a shareholder belonging to Category I , who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment . Afterwards, first and final call was made and was duly received . The forfeited shares of Deepak and Raju were reissued at ₹11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of company.

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Solution

Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
Bank A/c (1,50,000 × 2)
Dr.
3,00,000
To Share Application A/c
3,00,000
(Application money received on 1,50,000 shares)
Share Application A/c
Dr.
3,00,000
To Share Capital A/c
1,00,000
To Share Allotment A/c
1,10,000
To Bank A/c
90,000
(Application money transferred to Share Capital)
Share Allotment A/c (50,000 × 4)
2,00,000
To Share Capital A/c
2,00,000
(Allotment money due on 50,000 shares)
Bank A/c
Dr.
88,900
To Share Allotment A/c (WN2)
88,900
(Allotment money received)
Share Capital A/c (600 × 6)
Dr.
3,600
To Share Allotment A/c (1,000 + 100)
1,100
To Share Forfeiture A/c (2,000 + 500)
2,500
(600 shares forfeited for non–payment of allotment money)
Share First and Final Call A/c
Dr.
1,97,600
To Share Capital A/c
1,97,600
(Call money due on 49,400 shares)
Bank A/c
Dr.
1,97,600
To Share First and Final Call A/c
1,97,600
(Call money received)
Bank A/c (600 × 11)
Dr.
6,600
To Share Capital A/c
6,000
To Security Premium Reserve A/c
600
(600 shares re–issued at Rs 11 per share)
Share Forfeiture A/c
Dr.
2,500
To Capital Reserve A/c
2,500
(Profit on re–issue transferred to Capital Reserve)

Working Notes:

WN1:Computation Table
Categories
Shares Applied
Shares Allotted
Money received on Application
@ Rs 2 each
Money transferred to Share Capital
@ Rs 2 each
Excess Application Money
Amount adjusted on Allotment
Money refunded
I
80,000
40,000
1,60,000
80,000
80,000
80,000
II
25,000
10,000
50,000
20,000
30,000
30,000
III
45,000
90,000
90,000
1,50,000
50,000
3,00,000
1,00,000
1,10,000
1,10,000
90,000

WN2:Calculation of Amount Received on Allotment
Amount Due on Allotment
2,00,000
Less: Excess Received
1,10,000
Balance to be Received
90,000
Less: Amount not paid by Deepak
(1,000)
Less: Amount not paid by Raju
(100)
Amount received on Allotment
88,900

WN3: Calculation of Shares Applied/Allotted

Shares Allotted to Deepak=40,00080,000×1,000=500Shares Applied by Raju=25,00010,000×100=250
Amount not paid by Deepak on Allotment
Amount received on Application
2,000
Less: Transferred to Share Capital
(1,000)
Excess received on Application
1,000
Amount due on allotment
2,000
Less: Excess adjustment
(1,000)
Amount unpaid by Deepak
1,000
Amount not paid by Raju on Allotment
Amount received on Application
500
Less: Transferred to Share Capital
(200)
Excess received on Application
300
Amount due on allotment
400
Less: Excess adjustment
(300)
Amount unpaid by Raju
100

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Q.

R.K.Ltd., invited applications for issuing 80,000 equity shares of Rs 10 each at a premium of Rs 35 per share. The amount was payable as follows:
On Application Rs 8 (including Rs 5 premium) per share.
On Allotment Rs 12 (including Rs 10 premium) per share.

On First and Final Call Balance.

Application for 75,000 shares were received and allotment was made to all the applicants. Rahim, a shareholder who was allotted 3,000 shares failed to pay allotment money and his shares were immediately forfeited. Afterwards, the first and final call was made. Suhani who held 3,000 shares failed to pay the final call. Her shares were also forfeited. All the forfeited shares were re-issued for a sum of Rs 62,000 as fully paid up.

Pass the necessary Journal entries for the above transactions in the books of R.K.Ltd.

OR

Sargam Ltd., invited applications for issuing 80,000 equity shares of Rs 100 each at a premium. The amount was payable as follows :

On Application Rs 20 per share.

On Allotment Rs 60 (including premium) per share.

On First and Final Call Rs 40 per share.

Application for 1,20,000 shares were received. Allotment was made on pro-rata basis to all the applicants. Excess money received on applications was adjusted on sums due to allotment. Sitaram, who had applied for 6,000 shares failed to pay the allotment money and Harnam did not pay first and final call on 800 shares allotted to him. The shares of Sitaram and Harnam were forfeited. 4,200 of these shares were re-issued for Rs 100 per share as fully paid up. The re-issued shares included all the forfeited shares of Harnam.

Pass necessary Journal entries for the above transactions in the books of Sargam Ltd.

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