Question

Spencer Paints Ltd. was registered with an authorised capital of Rs. 50,00,000 divided in 5,00,000 equity shares of Rs.10 each. Company issued 20,00,000 equity shares at a premium of Rs.3 per share, payable as follows: Rs 4 on Application, Rs 5 on Allotment (including premium), Rs 2 on First Call and Rs 2 on second and Final Call.

All shares were subscribed and all the money was duly received. Share issue expenses amounted to Rs 75,000 which were fully written off against securities premium.

Prepare necessary Journal Entries and Bank Account.

Answer 1

$\begin{array}{ccccccc}& & & & \text{JOURNAL}& & \end{array}$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Dr (Rs)}& \text{Cr(Rs)}\\ & \text{Bank A/c}& \text{Dr.}& & 8,00,000& \\ & \text{To Equity Share Application A/c}& & & & 8,00,000\\ & \text{(Money received on application)}& & & & \\ & \underset{–}{}& & & & \\ & \text{Equity Share Application A/c}& \text{Dr.}& & 8,00,000& \\ & \text{To Equity Share Capital A/c}& & & & 8,00,000\\ & \text{(Transfer of application money to Share Capital A/c)}& & & & \\ & \underset{–}{}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 10,00,000& \\ & \text{To Equity Share Allotment A/c}& & & & 10,00,000\\ & \text{Allotment money received including premium )}& & & & \\ & \underset{–}{}& & & & \\ & \text{Equity Share Allotment A/c}& \text{Dr.}& & 10,00,000& \\ & \text{To Equity Share Capital A/c}& & & & 4,00,000\\ & \text{To Securities Premium Reserve A/c}& & & & 6,00,000\\ & \text{(Allotment, including premium transfer to share capital and securities premium account)}& & & & \\ & \underset{–}{}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 4,00,000& \\ & \text{To Equity Share First Call A/c}& & & & 4,00,000\\ & \text{(Money received on first call )}& & & & \\ & \underset{–}{}& & & & \\ & \text{Equity Share First Call A/c}& \text{Dr.}& & 4,00,000& \\ & \text{To Equity Share First Call A/c}& & & & 4,00,000\\ & \text{(Money transfer to share capital account)}& & & & \\ & \underset{–}{}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 4,00,000& \\ & \text{To Equity Share Second and Final Call A/c}& & & & 4,00,000\\ & \text{(money received on second and final call)}& & & & \\ & \underset{–}{}& & & & \\ & \text{Equity Share Second and Final Call A/c}& \text{Dr.}& & 4,00,000& \\ & \text{To Equity Share Capital A/c}& & & & 4,00,000\\ & \text{(Second and final call transfer to share capital account )}& & & & \\ & \underset{–}{}& & & & \\ & \text{Share Issue Expenses A/c}& \text{Dr.}& & 75,000& \\ & \text{To Bank A/c}& & & & 75,000\\ & \text{(Expenses incurred on issue of shares)}& & & & \\ & \underset{–}{}& & & & \\ & \text{Securities Premium Reserve A/c}& \text{Dr.}& & 75,000& \\ & \text{To Share Issue Expenses A/c}& & & & 75,000\\ & \text{(Share Issue expenses written off against Securities}& & & & \\ & \text{Premium Reserve A/c)}& & & & \end{array}$

$\begin{array}{ccccccc}\text{Dr}& & & & \text{BANK ACCOUNT}& & \text{Cr}\end{array}$ $\begin{array}{cccc}\text{Particulars}& \text{Rs.}& \text{Particulars}& \text{Rs.}\\ \text{Equity Share Application A/c}& 8,00,000& \text{Share Issue Expenses A/c}& 75,000\\ \text{Equity Share Allotment A/c}& 10,00,000& \text{Balance c/d}& 25,25,000\\ \text{Equity Share First Call A/c}& 4,00,000& & \\ \text{Equity Share Second and Final Call A/c}& 4,00,000& & \\ & \overline{\underset{–}{\underset{–}{26,00,000}}}& & \overline{\underset{–}{\underset{–}{26,00,000}}}\end{array}$