CameraIcon
CameraIcon
SearchIcon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

The Orient Company offered for public subscription 20,000 equity shares of Rs.10 each at a premium of 10% payable at Rs.2 on application; Rs.4 on allotment including premium; Rs.3 on first call and Rs.2 on second and final call. Applications for 26,000 shares were received. Applications for 4,000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made and all the money were received except the final call on 500 shares which were forfeited. 300 of the forfeited shares were later on issued as fully paid at Rs. 9 per share. Give journal entries and prepare the balance sheet.

Open in App
Solution

Journal Entries
DateParticularsLFAmt. (Dr)Amt.(Cr)(i)Bank A/c (26,000×2)Dr52,000 To Share application A/c52,000(Share application money received for26,000 shares @ Rs.2 per share ) –––––––––––––––––––––––––––––––––––––––––––––(ii)Share Application A/cDr52,000 To Share Capital A/c (20,000×2)40,000 To Share Allotment A/c (2,000×2)4,000 To Bank A/c (4,000×2)8,000(Application money @ Rs.2 per share of20,000 shares transferred to share capital accountand money of 4,000 shares returned, remaining toshare allotment) –––––––––––––––––––––––––––––––––––––––––––––(iii)Bank A/c (80,0004,000)Dr76,000 To Share Allotment A/c76,000(Share allotment money received for all theshares after adjustment of money transferred fromshare application) –––––––––––––––––––––––––––––––––––––––––––––(iv)Share Allotment A/cDr60,000 To Share Capital A/c (20,000×3)60,000 To Share Premium A/c (2,000×1)20,000(Share allotment money transferred to share capital and securities premium account) –––––––––––––––––––––––––––––––––––––––––––––(v)Bank A/c (20,000×3)Dr60,000 To Share First Call A/c60,000(Share first call money received for 20,000 shares@ Rs.2 per share) –––––––––––––––––––––––––––––––––––––––––––––(vi)Share First Call A/cDr60,000 To Share Capital A/c (20,000×3)60,000(Share first call money transferred to share capital account) –––––––––––––––––––––––––––––––––––––––––––––(vii)Bank A/c (19,500×2)Dr39,000 To Share Second and Final Call A/c39,000(Share second and final call money receivedfor 19,500 shares @ Rs. 2 per share and 500 sharesfailed to pay) –––––––––––––––––––––––––––––––––––––––––––––(viii)Share Second and Final Call A/cDr40,000 To Share Capital A/c (20,000×2)40,000(Share second and final call money transferredto share capital account) –––––––––––––––––––––––––––––––––––––––––––––(ix)Share Capital A/c (500×10)Dr5,000 To Share Second and Final Call A/c (500×2)1,000 To Share Forfeiture A/c (500×8)4,000(500 shares of Rs.10 per share fully called-upforfeited for non-payment of second and final callRs.2 per share) –––––––––––––––––––––––––––––––––––––––––––––(x)Bank A/c (300×9)Dr2,700 Share Forfeiture A/c (300×1)Dr300 To Share Capital A/c (300×10)3,000(300 shares @ Rs.10 each reissued for Rs.9 pershare fully paid-up) –––––––––––––––––––––––––––––––––––––––––––––(xi)Share Forfeiture A/c (Working Note)Dr2,100 To Capital Reserve A/c2,100(Balance of 300 shares in share forfeitureaccount transferred to capital reserve account,after adjustment)

Working Note :
Calculation of Capital Reserve
Money transferred to share forfeiture against forfeitureRs.2,400of 300 shares (300×8)(-) Money adjusted on reissue of 300 sharesfrom forfeiture account (300×1)Rs.300Amount transferred to Capital Reserve¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯Rs.2,100–––––––––

flag
Suggest Corrections
thumbs-up
22
similar_icon
Similar questions
View More
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Death of a Partner
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon