Question

The Directors of Super Star Ltd. invited applications for 2,00,000 Equity Shares of ₹ 10 each to be issued at 20% premium. The money payable per shares was: on application ₹ 5, on allotment ₹ 4 (including premium of ₹ 2), first call ₹ 2 and final call ₹ 1.

Applications were received for 2,40,000 shares and allotment was made as:
(i) to applicants for 1,00,000 shares$—$ in full,
(ii) to applicants for 80,000 shares$—$60,000 shares,
(iii) to applicants for 60,000 shares$—$40,000 shares.

Applicants of 1,000 shares falling in Category
(i) and applicants of 1,200 shares falling in Category
(ii) failed to pay allotment money. These shares were forfeited on failure to pay first call. Holders of 1,200 shares falling in Category
(iii) failed to pay the first and final call and these shares were forfeited after final call.

1,300 shares[1,000 of Category(i) and 300 of Category (ii)] were reissued at ₹ 8 per share as fully paid-up.
Journalise the above transactions. Prepare Cash book and Balance Sheet.

Answer 1

Applied shares 2,40,000

Allotment made as:				Payable as:
Applied		Allotted		Application	Rs 5
1,00,000		1,00,000		Allotment	Rs 4	(2 + 2)
80,000		60,000		First Call	Rs 2
60,000		40,000		Final Call	Re 1
2,40,000		2,00,000			Rs 12	(10 + 2) per share

Cash Book
Dr.					Cr.
Date	Particulars	Amount Rs	Date	Particulars	Amount Rs
	Equity Share Application (2,40,000 × Rs 5)	12,00,000		Balance c/d
	Equity Share Allotment (See note-2)	5,93,900
	Equity Share First Call (See note-3)	3,93,800
	Equity Share First Call	1,96,900
	(1,96,900 shares × Re 1)
	Equity Share Capital (1,000 shares of category i)	8,000
	Equity Share Capital (300 shares of category ii)	2,400			23,95,000
		23,95,000			23,95,000

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Equity Share Application A/c	Dr.		12,00,000
	To Equity Share Capital A/c				10,00,000
	To Equity Share allotment A/c				2,00,000
	(Equity Share application money of 2,00,000 shares at Rs 5 each transferred to Share Capital and Rs 2,00,000 adjusted on allotment)
	Equity Share Allotment A/c	Dr.		8,00,000
	To Equity Share Capital A/c				4,00,000
	To Securities Premium A/c				4,00,000
	(Share allotment due on 2,00,000 shares at Rs 4 each including Rs 2 premium)
	Equity Share First Call A/c	Dr.		4,00,000
	To Equity Share Capital A/c				4,00,000
	(First call due on 2,00,000 shares at Rs 2 each)
	Equity Share Capital A/c	Dr.		9,000
	Securities Premium A/c	Dr.		2,000
	To Share Forfeiture A/c (900 shares × Rs 5)				5,000
	To Equity Share Allotment A/c (900 shares × Rs 4)				4,000
	To Equity Share First Call A/c (900 shares × Rs 2)				2,000
	(1,000 shares of category (i) Rs 10 each, on which Rs 8 had called-up, forfeited for the non-payment of amount due)
	Equity Share Capital A/c	Dr.		8,100
	Securities Premium A/c	Dr.		1,800
	To Share Forfeiture A/c				6,000
	To Equity Shares Allotment A/c				2,100
	To Equity Shares First-Call A/c				1,800
	(900 shares of category (ii) forfeited for the non-payment of amount due)
	Equity Share Final Call A/c	Dr.		1,98,100
	To Equity Shared Capital A/c				1,98,100
	(Final call due on 1,98,100 shares at Re 1 each)
	Equity Share Capital A/c	Dr.		12,000
	To Share Forfeiture A/c				8,400
	To Share First Call A/c				2,400
	To Share Final Call A/c				1,200
	(1,200 shares of category (iii) forfeited for the non-payment amount due)
	Share Forfeiture A/c	Dr.		2,000
	To Equity Share Capital A/c				2,000
	(Loss on re-issue of 1,000 shares of category (i) charged from Share Forfeiture Account)
	Share Forfeiture A/c	Dr.		600
	To Equity Share Capital A/c				600
	(Loss on re-issue of 300 of category (ii) charged from Share Forfeiture Account)
	Share Forfeiture A/c	Dr.		4,400
	To Capital Reserve A/c				4,400
	(Balance in Share Forfeiture Account of 1,300 re-issued shares transferred to Capital Reserve)

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Super Star Ltd.
Balance Sheet
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	19,94,400
b. Reserves and Surplus	2	4,00,600
2. Non-Current Liabilities
3. Current Liabilities
Total		23,95,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	23,95,000
Total		23,95,000

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
1	Share Capital
	Authorised Share Capital
	……. Equity Shares of Rs 10 each		-
	Issued Share Capital
	2,00,000 Equity Shares of Rs 10 each		20,00,000
	Subscribed, Called-up and Paid-up Share Capital
	1,98,200 Equity Shares of Rs 10 each	19,82,000
	Add: Shares Forfeited (600 shares × Rs 6.66)	4,000
	Add: Shares Forfeited (1,200 shares × Rs 7)	8,400	19,94,400
2	Reserves and Surplus
	Securities Premium	3,96,200
	Capital Reserve	4,400	4,00,600
3	Cash and Cash Equivalents
	Cash at Bank		23,95,000

Working Notes:

1. 1,200 shares of Category (ii)

Number of share allotted

Money received on application (1,200 shares × Rs 5)	=	6,000
Less: Application money transferred to Share Capital (900 shares × Rs 5)	=	4,500
Excess money received from 1,200 shares on Application	=	1,500

Money due on Allotment (900 shares × Rs 4)	=	3,600
Less: Excess money on Application	=	1,500
Calls-in-Arrears on Allotment of category (ii)		2,100

2. Share Allotment

Money due on Allotment (2,00,000 shares × Rs 4)	=	8,00,000
Less: Excess money on Application	=	2,00,000
Less: Calls-in-Arrears 1,000 shares of category (i) (1,000 shares × Rs 4)	=	4,000
Less: Calls-in-Arrears 1,200 shares of category (ii)	=	2,100
Money received on Allotment	=	5,93,900

3. Share First Call

First Call due on 2,00,000 shares × Rs 2	=	4,00,000
Less: Calls-in-Arrears on 3,100 shares × Rs 2 (1,000 + 900 + 1,200 shares of category (i), (ii) and (iii) respectively)		(6,200)
Money received on First Call		3,93,800

4. Share Final Call

Money due on Share Final Call (2,00,000 – 1900) × Rs 1	=	1,98,100
Less: Calls-in-Arrears of 1,200 shares of Category (iii)		1,200
Money received on Final Call		1,96,900

Capital Reserve

Calculation of Share Forfeiture of 1,000 shares of category (i)

Share Forfeiture	Rs 5,000	Cr.
Less: Share Forfeiture	Rs 2,000	Dr.
Capital Reserve of 1,000 shares (balance after re-issue)	Rs 3,000	Cr.

Calculation of Share Forfeiture of 300 shares of category (ii)

Share Forfeiture = Credit	=	Rs	6.67	per share
Less: Share Forfeiture Debit	=	Rs	2	per share
Capital Reserve (balance after re-issue)	=	Rs	4.67	per share

Capital Reserve of 300 shares = Capital Reserve (per share) × No. of shares re-issued = Rs 4.67 × 300 shares = Rs 1,400

Total Capital Reserve of 1,300 shares = Capital Reserve of 1,000 shares of category (i) + Capital Reserve of 300 shares of category (ii) = 3,000 + 1,400 = Rs 4,400