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PRACTICAL PROBLEMS

(Forfeiture of shares issued at par)

Vijay Ltd. issued Rs 40,000 Equity shares of Rs 10 each payable as follows.

On Application : Rs 2 On Allotment : Rs 3
On First Call : Rs 3 On Second Call : Rs 2

The company received applications for Rs 50,000 equity shares. Allotment for shares was made on pro rata basis. Share allotment and calls were made and as also received except Raja holding Rs 1,000 shares failed to pay both the calls. His shares were forfeited after second call.

Record the above transactions in books of Vijay Ltd.

Note: Excess money received on share application 10,000 × Rs 2 = 20,000 will be diverted to share allotment A/c.

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Solution

Shares Applied
Shares Allotted
50,000
40,000

Books of Vijay Ltd.
Journal Entry
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 received on 50,000 shares of Rs 2 each)
Equity Share Application A/c
Dr.
1,00,000
To Equity Share Capital a/c
80,000
To Equity Share Allotment A/c
20,000
(Share application transferred to Share Capital and Application money received in excess on 10,000 shares adjusted on Share Allotment)
Equity Share Allotment A/c
Dr.
1,20,000
To Equity Share Capital A/c
1,20,000
(Share allotment due on 40,000 shares of Rs 3 each)
Bank A/c
Dr.
1,00,000
To Equity Share Allotment A/c
1,00,000
(Share allotment received)
Equity Share First Call A/c
Dr.
1,20,000
To Equity Share Capital A/c
1,20,000
(Share first call due on 40,000 shares of Rs 3 each)
Bank A/c
Dr.
1,17,000
To Equity Share First Call A/c
1,17,000
(Share first call received on 39,000 shares of Rs 3 each)
Equity Share Final Call A/c
Dr.
80,000
To Equity Share Capital A/c
80,000
(Share final call due on 40,000 shares of Rs 2 each)
Bank A/c
Dr.
78,000
To Equity Share Final Call A/c
78,000
(Share final call received on 39,000 shares of Rs 2 each)
Equity Share Capital A/c
Dr.
10,000
To Equity Share Forfeiture A/c
5,000
To Equity Share First Call A/c
3,000
To Equity Share Final Call A/c
2,000
(1,000 shares were forfeited for non-payment of Share First Call of Rs 3 each and Share Final Call of Rs 2 each)



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Q.

Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each. The amount was payable as follows :

On applications and allotment - Rs 4 per share.

On First Call - Rs 3 per share.

On Second and Final Call - Balance.

Application for 1,00,000 shares were received. Shares were allotted to the applicants on pro-rata basis and excess money received with applications was transferred towards sums due on first call.

Vibha who was allotted 750 share failed to pay the first call. Her shares were immediately forfeited. Afterwards, the second call was made. The amount due on second call was also received except on 1,000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were re-issued to Mohit For Rs 9,000 as fully paid up. Pass necessary Journal entries in the books of Alfa Ltd. for the above transactions.

OR

Jeevan Dhara Ltd. Invited applications for issuing 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payble as follows :

On application-Rs 2 per share.

On allotment-Rs 5 (including premium).

On first and final call - Balance.

Application for 1,50,000 shares were received. Shares were allotted to all the applications on pro-rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call. Madhur who was allotted 2,400 Shares failed to pay the first and final call. Shares of both, Manu and Madhur were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass the necessary Journal entries for the above transactions in the books of Jeevan Dhara Ltd.

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