Question

Life machine tools Limited, issued 50,000 equity shares of Rs.10 each at Rs.12 per share, payable at Rs.5 on application (including premium), Rs.4 on allotment and the balance on the first and final call.

Applications for 70,000 shares had been received. Of the cash received, Rs.40,000 was returned and Rs.60,000 was applied to the amount due on allotment, the balance of which was paid. All shareholders paid the call due, with the exception of one share holder of 500 shares. These shares were forfeited and reissued as fully paid at Rs.8 per share. Journalise the transactions.

Answer 1

$\text{Journal Entries}$
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Bank A/c}(70,000\times 5)& \text{Dr}& & 3,50,000& \\ & \text{To Share application A/c}& & & & 3,50,000\\ & \text{(Application money received on application}& & & & \\ & \text{for 70,000 shares @ Rs.5 per share including}& & & & \\ & \text{premium Rs.2)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Share application A/c}& \text{Dr}& & 3,50,000& \\ & \text{To Share capital A/c}(50,000\times 3)& & & & 1,50,000\\ & \text{To Securities Premium A/c}(50,000\times 2)& & & & 1,00,000\\ & \text{To Share Allotment A/c}& & & & 60,000\\ & \text{To Bank A/c}& & & & 40,000\\ & \text{(Share application money for 50,000 shares}& & & & \\ & \text{transferred to share capital account and securities}& & & & \\ & \text{premium, Rs.60,000 adjusted to allotment and}& & & & \\ & \text{Rs.40,000 returned)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iii)}& \text{Bank A/c}(2,00,000-60,000)& & & 1,40,000& \\ & \text{To Share Allotment A/c}& & & & 1,40,000\\ & \text{(Share allotment money received on shares}& & & & \\ & \text{allotment)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iv)}& \text{Share allotment A/c}& & & 2,00,000& \\ & \text{To Share Capital A/c}(50,000\times 4)& & & & 2,00,000\\ & \text{(Share allotment money due on 50,000}& & & & \\ & \text{shares @ Rs.4 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(v)}& \text{Bank A/c}(49,500\times 3)& & & 1,48,500& \\ & \text{To Share First and Final Call A/c}& & & & 1,48,500\\ & \text{(Share first and final call money received}& & & & \\ & \text{from 49,500 shares @ Rs.3 per share and 500}& & & & \\ & \text{shares failed to pay)}& & & & \\ & \underset{–}{}& & & & \\ \text{(vi)}& \text{Share First and Final Call A/c}& & & 1,50,000& \\ & \text{To Share Capital A/c}(50,000\times 3)& & & & 1,50,000\\ & \text{(Share first and final call money due on}& & & & \\ & \text{50,000 share @ Rs.3 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(vii)}& \text{Share Capital A/c}(500\times 10)& \text{Dr}& & 5,000& \\ & \text{To Share First and Final Call A/c}(500\times 3)& & & & 1,500\\ & \text{To Share forfeiture A/c}(500\times 7)& & & & 3,500\\ & \text{(500 shares fully paid up}& & & & \\ & \text{forfeited for the non-payment of share first and}& & & & \\ & \text{final call Rs.3 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(viii)}& \text{Bank A/c}(500\times 8)& \text{Dr}& & 4,000& \\ & \text{Share Forfeiture A/c}(500\times 2)& \text{Dr}& & 1,000& \\ & \text{To Share Capital A/c}& & & & 5,000\\ & \text{(500 share reissued @ Rs. 8 per share fully}& & & & \\ & \text{paid up)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ix)}& \text{Share forfeiture A/c}(3,500-1,000)& \text{Dr}& & 2,500& \\ & \text{To Capital Reserve A/c}& & & & 2,500\\ & \text{(Balance of 500 shares in forfeiture account}& & & & \\ & \text{after adjustment, transferred to capital reserve}& & & & \\ & \text{account)}& & & & \end{array}$