Question

PRACTICAL PROBLEMS

(Forfeiture of shares issued at premium)

The Century Ltd. issued 8,000 shares of Rs 100 at a premium of 10% payable as under-

On Application	-	Rs 25	On Allotment	-	Rs 40 (including premium)
On First Call	-	Rs 20	On Second Call	-	Rs 25

Company called up allotment and both the calls which were duly received except Ramesh to whom 500 shares were allotted failed to pay allotment and calls.

Prepare Journal of Century Ltd.

Answer 1

Books of Century Ltd.
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		2,00,000
	To Share Application A/c				2,00,000
	(Share application received on 8,000 shares of Rs 25 each)
	Share Application A/c	Dr.		2,00,000
	To Share Capital A/c				2,00,000
	(Share application transferred to Share Capital A/c)
	Share Allotment A/c	Dr.		3,20,000
	To Share Capital A/c				2,40,000
	To Securities Premium A/c				80,000
	(Share allotment due on 8,000 shares of Rs 40 each including Premium of Rs 10 each)
	Bank A/c	Dr.		3,00,000
	Calls-in-Arrears A/c	Dr.		20,000
	To Share Allotment A/c				3,20,000
	(Share allotment received)
	Share First Call A/c	Dr.		1,60,000
	To Share Capital A/c				1,60,000
	(Share first call due on 8,000 shares of Rs 20 each)
	Bank A/c	Dr.		1,50,000
	Calls-in-Arrears A/c	Dr.		10,000
	To Share First Call A/c				1,60,000
	(Share first call received on 7,500 shares of Rs 20 each)
	Share Final Call A/c	Dr.		2,00,000
	To Share Capital A/c				2,00,000
	(Share final call due on 8,000 shares of Rs 25 each)
	Bank A/c	Dr.		1,87,500
	Calls-in-Arrears A/c	Dr.		12,500
	To Share Final Call A/c				2,00,000
	(Share final call received on 7,500 shares of Rs 25 each)

Working Notes: