Question

Software solution India Ltd inviting application for Rs. 20,000 equity share of Rs. 100 each, payable Rs. 40 on application, Rs.30 on allotment and Rs. 30 on call. The company received applications for 32,000 shares. Application for 2,000 shares were rejected and money returned to Applicants. Applications for 10,000 shares were accepted in full and applicants for 20,000 shares allotted half of the number of share applied and excess application money adjusted into allotment. All money received due on allotment and call. Prepare journal and cash book.

Answer 1

$\text{Journal Entries}$
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Equity Share Application A/c}& \text{Dr}& & 11,00,000& \\ & \text{To Equity Share Capital A/c}(20,000\times 40)& & & & 8,00,000\\ & \text{To Equity Share Allotment A/c}(10,000\times 30)& & & & 3,00,000\\ & \text{(Application money transferred to equity}& & & & \\ & \text{share capital for 20,000 shares @ Rs.40 and}& & & & \\ & \text{Rs.3,00,000 is adjusted towards allotment)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Equity Share Allotment A/c}& \text{Dr}& & 6,00,000& \\ & \text{To Equity Share Capital A/c}(20,000\times 30)& & & & 6,00,000\\ & \text{(Equity share allotment money due on}& & & & \\ & \text{20,000 shares @ Rs.30 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iii)}& \text{Equity Share First and Final Call A/c}& \text{Dr}& & 6,00,000& \\ & \text{To Equity Share Capital A/c}(20,000\times 30)& & & & 6,00,000\\ & \text{(Equity share on first and final call due on}& & & & \\ & \text{20,000 shares @ Rs.30 per share)}& & & & \end{array}$
Note: Entries related to money received against application, allotment and call are directly taken in cash book.

$\begin{array}{ccccccc}& & & & & & \\ \text{Dr}& & & & \text{Cash Book (Bank Column)}& & \text{Cr}\end{array}$
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ & \text{Equity Share}& & & & \text{Equity Share}& & 1,80,000\\ & \text{Application}& & 12,80,000& & \text{Application}& & \\ & & & & & (80,000+1,00,000)& & \\ & \text{Equity Share}& & & & \text{Balance c/d}& & 20,00,000\\ & \text{Allotment}& & 3,00,000& & & & \\ & \text{Equity Share First}& & & & & & \\ & \text{and Final Call}& & 6,00,000& & & & \\ & & & \underset{–}{\underset{–}{\overline{21,80,000}}}& & & & \underset{–}{\underset{–}{\overline{21,80,000}}}\end{array}$

Working Note:
$\begin{array}{cc}& \\ \text{Applications received for 32,000 shares @ 40 each}& 12,80,000\\ \text{Applications for 2,000 shares rejected and amount}(2,000\times 40)\text{refunded}& (80,000)\\ & \overline{12,00,000}\\ 10,000\text{shares alloted in full and amount transferred to share capital}(10,000\times 40)& \underset{–}{(4,00,000)}\\ & 8,00,000\\ 20\text{shares allotted 10 shares hence amount for 10,000 shares adjusted to}& (4,00,000)\\ \text{share capital}(10000\times 40)\text{and excess 10,000 shares}@\text{Rs. 30 taken as}& (3,00,000)\\ \text{allotment advance remaining Rs. 10 refunded for excess 10,000 shares}& \underset{–}{(1,00,000)}\\ & \times \\ \text{Total refund (80,000+1,00,000)}=\text{Rs}.1,80,000& \\ \text{Total amount due on allotment (20,000 share @ 30)}& 6,00,000\\ (-)\text{Amount received on application}& (3,00,000)\\ \text{Amount to be received on allotment}& \underset{–}{\overline{3,00,000}}\end{array}$

Adjustment Table

$\begin{array}{ccccccccc}\text{Categories}& \text{Shares}& \text{Stores}& \text{Application}& \text{Application}& \text{Excess}& \text{Excess}& \text{Adjusted}& \text{in}\\ & \text{Application}& \text{Alloted}& \text{Money Received}& \text{Money due}& & \text{Allotment}& \text{Calls}& \text{Return}\\ \left(\text{i}\right)& 2,000& -& 80,000& -& 80,000& & & 80,000\\ \left(\text{ii}\right)& 10,000& 10,000& 4,00,000& 4,00,000& -& -& -& \\ \left(\text{iii}\right)& 20,000& 10,000& 8,00,000& 4,00,000& 4,00,000& 3,00,000& -& 1,00,000\\ & \underset{–}{\underset{–}{\overline{32,000}}}& \underset{–}{\underset{–}{\overline{20,000}}}& \underset{–}{\underset{–}{\overline{12,80,000}}}& \underset{–}{\underset{–}{\overline{8,00,000}}}& \underset{–}{\underset{–}{\overline{4,80,000}}}& \underset{–}{\underset{–}{\overline{3,00,000}}}& \underset{–}{\underset{–}{\overline{-}}}& \underset{–}{\underset{–}{\overline{1,80,000}}}\end{array}$