Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹ 10 each, issued the entire amount of the shares payable as:
₹ 5 on application (including premium ₹ 2 per share),
₹ 4 on allotment, and
₹ 3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on which the allotment money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7 per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.

Open in App

Solution

Authorised capital 20,000 shares of 10 each

Issued and applied 20,000 shares of Rs 10 each at a premium Rs 2

Payable as:

Application

=

Rs 5

(3+2)

Allotment

=

Rs 4

First and Final Call

=

Rs 3

Rs 12

(10+2)

Books of Krishna & Co. Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Bank A/c

Dr.

1,00,000

To Equity Share Application A/c

1,00,000

(Share application money received for 20,000 shares at Rs 5 each)

Equity Share Application A/c

Dr.

1,00,000

To Equity Share Capital A/c

60,000

To Securities Premium A/c

40,000

(Share application of 20,000 shares transferred to Shares Capital at Rs 3 per share and Securities Premium and Rs 2 per share)

Equity Share Allotment A/c

Dr.

80,000

To Equity Share Capital A/c

80,000

(Share allotment due on 20,000 shares at Rs 4 each)

Bank A/c

Dr.

79,200

Calls-in-Arrears A/c

Dr.

800

To Equity Share Allotment A/c

80,000

(Share allotment received on 19,800 shares and holders of 200 shares failed to pay it)

Equity Share first and final call A/c

Dr.

60,000

To Equity Share Capital A/c

60,000

(First and Final call due on 20,000 shares at Rs 3 each)

Bank A/c

Dr.

58,500

Calls-in-Arrears A/c

Dr.

1,500

To Equity Share First And Final Call A/c

60,000

(Share first and final call of Rs 3 each received on 19,500 shares and holders of 500 shares failed to pay it)

Equity Share Capital A/c

Dr.

2,000

To Share Forfeiture A/c

600

To Calls-in-Arrears A/c

1,400

(200 shares of Rs 10 each forfeited for the non-payment of allotment Rs 4 and call Rs 7 per share)

Equity Share Capital A/c

Dr.

3,000

To Share Forfeiture A/c

2,100

To Calls-in-Arrears A/c

900

(300 shares of Rs 10 each forfeited for the non-payment of call money Rs 3 per share)

Bank A/c

Dr.

2,800

Share Forfeiture A/c

Dr.

1,200

To Share Capital

4,000

(400 shares of Rs 10 each re-issued at Rs 7 per share as fully paid-up)

Share Forfeiture A/c

Dr.

800

To Capital Reserve A/c

800

(Balance in share forfeiture of 400 shares transferred to Capital Reserve)

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Krishna & Co Ltd.

Balance Sheet

Particulars

Note No.

Amount

(Rs)

I. Equity and Liabilities

1. Shareholders’ Funds

a. Share Capital

1

1,99,700

b. Reserves and Surplus

2

40,800

2. Non-Current Liabilities

3. Current Liabilities

Total

2,40,500

II. Assets

1. Non-Current Assets

2. Current Assets

a. Cash and Cash Equivalents

3

2,40,500

Total

2,40,500

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Share Capital

Authorised Share Capital

20,000 Equity Shares of Rs 10 each

2,00,000

Issued Share Capital

20,000 Equity Shares of Rs 10 each

2,00,000

Subscribed, Called-up and Paid-up Share Capital

19,900 Equity Shares of Rs 10 each

1,99,000

Add: Shares Forfeited (100 shares × Rs 7)

700

1,99,700

2

Reserves and Surplus

Securities Premium

40,000

Capital Reserve

800

40,800

3

Cash and Cash Equivalents

Cash at Bank

2,40,500

Working Notes:

1.

Capital Reserve of 200 shares on which only application received

Share Forfeiture Cr.

3

per share (excluding premium)

Share Forfeiture Dr.

3

per share

Balance of Share Forfeiture

NIL

2.

Capital Reserve of 200 shares on which application and allotment received

Share Forfeiture Cr.

Rs 7

per share (excluding premium)

Share Forfeiture Dr.

Rs 3

per share

Balance in Share Forfeiture

Rs 4

per share

Capital Reserve

=

200 Shares × Balance of Share Forfeiture (per share)

=

200 × 4

=

Rs 800

Suggest Corrections

Similar questions

Q. VXN Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at a premium of ₹ 8 per share . The amount was payable as follows:

On Application	$—$	₹ 4 per share (Including ₹ 2 premium);
On Allotment	$—$	₹ 6 per share (Including ₹ 3 premium);
On First Call	$—$	₹ 5 per share (Including ₹ 1 premium); and
On Second and Final Call	$—$	Balance Amount

The issue was fully subscribed . Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal's shares were immediately forfeited after allotment . Afterwards, the first call was made. Krishna, a holder of 100 shares , failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call . Krishna's shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received . All the forfeited shares were reissued at ₹ 9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.

Q. Dogra Ltd. had an authorised capital of ₹ 1,00,00,000 divided into Equity Shares of ₹ 100 each. The company offered 84,000 shares to the public at premium.
The amount was payable as follow:

On Application	$—$	₹ 30 per share,
On Allotment	$—$	₹ 40 per share(including premium),
On First and Final call	$—$	₹ 50 per share.

Applications were received for 80,000 shares.
All sums were duly received except the following:
Lakhan, a holder of 200 shares did not pay allotment and call money.
Paras, a holder of 400 shares did not pay call money.
The company, forfeited the shares of Lakhan and Paras. Subsequently the forfeited shares were reissued for ₹ 80 per share as fully paid-up . Show the entries for the above transactions in the Cash Book and journal of the company

Q. A company issued 10,000 Equity Shares of ₹ 10 each at a premium of ₹ 3 per share payable ₹ 5 on application, ₹ 5 (including premium) on allotment and the balance on first call . All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received.
Pass necessary journal entries to record the above.

Q. Kamal Ltd. was formed on 1st April, 2010 with an authorised capital of ₹ 2,00,000 , divided into 2,000 Equity Shares of ₹ 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of ₹ 5 per share payable as:

On application	₹ 10 per share,
On allotment	₹ 25 per share(including premium),
On first call	₹ 40 per share,
On final call	₹ 30 per share.

Applications were received for 900 shares which were duly allotted and the allotment money was received in full . At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ ₹ 60 per share , ₹ 70 per share paid-up.
Final call has not been made.
You are required to
(i) give necessary journal entries to record the above transactions and
(ii) show how share capital would appear in the Balance Sheet of the company.

Q. A Ltd was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20,000 such shares at a premium of ₹ 2 per share , payable as ₹ 2 per share on application, ₹ 5 per share on allotment (including premium) and ₹ 2 per share on first call made three months later. All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares and another shareholder holding 1,000 shares failed to pay the first call money.
Pass journal entries to record the above transactions and show how they will appear in the company's Balance Sheet.

Join BYJU'S Learning Program

Application	=	Rs 5	(3+2)
Allotment	=	Rs 4
First and Final Call	=	Rs 3
		Rs 12	(10+2)

Books of Krishna & Co. Ltd. Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Bank A/c	Dr.		1,00,000
	To Equity Share Application A/c				1,00,000
	(Share application money received for 20,000 shares at Rs 5 each)

	Equity Share Application A/c	Dr.		1,00,000
	To Equity Share Capital A/c				60,000
	To Securities Premium A/c				40,000
	(Share application of 20,000 shares transferred to Shares Capital at Rs 3 per share and Securities Premium and Rs 2 per share)

	Equity Share Allotment A/c	Dr.		80,000
	To Equity Share Capital A/c				80,000
	(Share allotment due on 20,000 shares at Rs 4 each)

	Bank A/c	Dr.		79,200
	Calls-in-Arrears A/c	Dr.		800
	To Equity Share Allotment A/c				80,000
	(Share allotment received on 19,800 shares and holders of 200 shares failed to pay it)

	Equity Share first and final call A/c	Dr.		60,000
	To Equity Share Capital A/c				60,000
	(First and Final call due on 20,000 shares at Rs 3 each)

	Bank A/c	Dr.		58,500
	Calls-in-Arrears A/c	Dr.		1,500
	To Equity Share First And Final Call A/c				60,000
	(Share first and final call of Rs 3 each received on 19,500 shares and holders of 500 shares failed to pay it)

	Equity Share Capital A/c	Dr.		2,000
	To Share Forfeiture A/c				600
	To Calls-in-Arrears A/c				1,400
	(200 shares of Rs 10 each forfeited for the non-payment of allotment Rs 4 and call Rs 7 per share)

	Equity Share Capital A/c	Dr.		3,000
	To Share Forfeiture A/c				2,100
	To Calls-in-Arrears A/c				900
	(300 shares of Rs 10 each forfeited for the non-payment of call money Rs 3 per share)

	Bank A/c	Dr.		2,800
	Share Forfeiture A/c	Dr.		1,200
	To Share Capital				4,000
	(400 shares of Rs 10 each re-issued at Rs 7 per share as fully paid-up)

	Share Forfeiture A/c	Dr.		800
	To Capital Reserve A/c				800
	(Balance in share forfeiture of 400 shares transferred to Capital Reserve)

Krishna & Co Ltd.
Balance Sheet
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,700
b. Reserves and Surplus	2	40,800
2. Non-Current Liabilities
3. Current Liabilities
Total		2,40,500

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,40,500
Total		2,40,500

1.	Capital Reserve of 200 shares on which only application received
	Share Forfeiture Cr.	3	per share (excluding premium)
	Share Forfeiture Dr.	3	per share
	Balance of Share Forfeiture	NIL

2.	Capital Reserve of 200 shares on which application and allotment received
	Share Forfeiture Cr.	Rs 7	per share (excluding premium)
	Share Forfeiture Dr.	Rs 3	per share
	Balance in Share Forfeiture	Rs 4	per share

Capital Reserve	=	200 Shares × Balance of Share Forfeiture (per share)
	=	200 × 4
	=	Rs 800