Question

Prakash Engineering Company issued for public subscription 40,000 equity shares of Rs.10 each at a premium of Rs.2 per share, payable as under:

On application-Rs.2 per share

On allotment-Rs.5 per share(including premium)

On first call-Rs.2 per share

On final call-Rs.3 per share.

Applications were received for 75,000 equity shares. The shares were alloted pro-rata to the applicants of 60,000 shares only, the remaining applications being rejected. Money overpaid on application was utilised towards the sum due on allotment. 'Ashok' to whom 3,000 shares were alloted failed to pay the allotment money and the two calls. 'Baneet' who applied for 3,000 shared paid the calls money along with allotment money. Pass the journal entries to record the above transactions.

Answer 1

	Journal Entry
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
		Bank A/c	Dr.		1,50,000
		To Share Application A/c				1,50,000
		(Share Application received on 75,000 shares of Rs 2 each)
		Share application A/c	Dr.		1,50,000
		To Share Capital A/c				80,000
		To Share Allotment A/c				40,000
		To Bank A/c				30,000
		(Share Application transferred to Share Capital A/c)
		Share Allotment A/c	Dr.		2,00,000
		To Share Capital A/c				1,20,000
		To Securities Premium A/c				80,000
		[Share Allotment is due for 40,000 shares of Rs 5 each (including Premium of Rs 2 each)]
		Bank A/c	Dr.		1,58,000
		Calls-in-arrears A/c	Dt.		12,000
		To Share Allotment A/c				1,60,000
		To Calls-in-Advance A/c				10,000
		(Share Allotment received on 37,000 shares of Rs 5 each with share First and final in advance)
		Share First Call A/c	Dr.		80,000
		To Share Capital A/c				80,000
		(Share First Call is due for 40,000 shares of Rs 2 each)
		Bank A/c	Dr.		70,000
		Calls-in-Arrears A/c	Dr.		6,000
		Calls-in-Advance A/c	Dr.		4,000
		To Share First Call A/c				80,000
		(Share First Call received on 37,000 shares of Rs 2 each)
		Share Final Call A/c	Dr.		1,20,000
		To Share Capital A/c				1,20,000
		(Share Final Call is due on 40,000 shares of Rs 3 each)
		Bank A/c	Dr.		1,05,000
		Calls-in-Arrears A/c	Dr.		9,000
		Calls-in-Advance A/c	Dr.		6,000
		To Share Final Call A/c				1,20,000
		(Share Final Call received on 37,000 shares of Rs 3 each)

Working Notes:
Share Application received for 60,000 shares of Rs 2 each = Rs 1,20,000
Share Allotted (40,000*2) = Rs 80,000
Excess Application money received = Rs 40,000 (Rs 1,20,000-Rs 80,000)

Share Allotment is due for 40,000 shares of Rs 5 each = Rs 2,00,000
Excess Application money to be adjusted = Rs 40,000
Amount to be received on share Allotment = Rs 1,60,000 (Rs 2,00,000-Rs 40,000)

40,000 shares were allotted, who applied = 60,00 shares
3,000 shares were allotted, who applied = 3,000/40,000*60,000 = 4,500 shares

Share Application Received on 4,500 shares of Rs 2 each = Rs 9,000
Share Allotted (3,000*2) = Rs 6,000
Excess Application money received = Rs 3,000 (Rs 9,000-Rs 6,000)

Share Allotment id due for 3,000 shares of Rs 5 each = Rs 15,000
Excess Application money to be adjusted = Rs 3,000
Amount not received on Share Allotment (Calls-in-Arrears) = Rs 12,000 (Rs 15,000-Rs 3,000)

Those who applied for 60,000 shares were allotted = 40,000 sharers
Those who applied for 3,000 shares were allotted = Rs 3,000/60,000*40,000 = 2,000 shares.

Calls-in-Advance = Rs 10,000 [2,000*5 (2+3)]

Amount Received on Allotment = Rs 1,58,000 (Rs 1,60,000-Rs 12,000+Rs 10,000).