JS Ltd. invited applications for issuing $80, 000$ equity shares of Rs. $10$ each at a premium of Rs. $6$ per share. The amount was payable as follows:
On application Rs. $4$ per share (including premium Rs. $1$ per share)
On Allotment Rs. $6$ per share (including premium Rs. $3$ per share)
On First and Final Call Balance.
Applications for $1, 60, 000$ shares were received. Applications for $40, 000$ shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Raman holding $400$ shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the final call was made. Veer who had applied for $1, 200$ shares failed to pay the final call. His shares were also forfeited. Out of the forfeited shares $500$ shares were re-issued at Rs. $8$ per share fully paid-up. The re-issued shares included all the forfeited shares of Raman.
Pass necessary journal entries for the above transactions in the books of J.S. Ltd.

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Solution

Calculation of amount unpaid on Allotment
Share Applied by Raman $= \frac{1, 20, 000}{80, 000} \times 400 = 600$ shares
Excess money received $= R s 800 (200 \times 4)$
Amount due on Allotment $= 1, 200 (400 \times 3)$
Less. Excess Application Money $800 - -- -$
Amount unpaid on Allotment $= 400$
Amount unpaid on Securities Premium $= 1, 200 - ---- - (400 \times 3)$
Total amount unpaid on allotment $= R s .1, 600$
Calculation of amountt received from Raman (Share Forfeiture-Cr.)
Add: Excess Application money $= 800 - -- -$
Share Forfeiture (Cr.) $= 2, 000$
Calculation of amount received from Veer (Share Forfeiture - Cr.)
Amount received on application $= 2, 400 (800 \times 3) \Rightarrow$ excluding premium
Amount received om allotment $= 2, 400 (800 \times 3)$ excluding premium
Total amount received $= R s .4, 800$
Calculation of Capital Reserve
(i) $400$ shares of Raman are reissued
share Forfeiture (Cr.) $= 2, 000$
Less: Share Forfeiture (Dr.) $800 - -- - (400 \times 2)$
Capital Reserve
(ii) $100$ shares of Veer are reissued
Share Forfeiture (Dr.) $200 - -- - (100 \times 2)$
Capital Reserve $= R s 400$
Total amount of Capital Reserve $R s .1, 600 (1, 200 + 400)$

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