Question

Life machine tools Limited, issued 50,000 equity shares of Rs 10 each at Rs 12 per share, payable at to Rs 5 on application (including premium), Rs 4 on allotment and the balance on the first and final call.

Applications for 70,000 shares had been received. Of the cash received, Rs 40,000 was returned and Rs 60,000 was applied to the amount due on allotment, the balance of which was paid. All shareholders paid the call due, with the exception of one share holder of 500 shares. These shares were forfeited and reissued as fully paid at Rs 8 per share. Journalise the transactions.

Answer 1

Books of Life machine tools Limited

 

Date	Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c			Dr.		3,50,000
		To Share Application A/c					3,50,000
	(Application money received on application for 70,000 shares @ Rs 5 per share including premium Rs 2)
	Share Application A/c			Dr.		3,50,000
		To Share Capital A/c					1,50,000
		To Securities Premium A/c					1,00,000
		To Share Allotment A/c					60,000
		To Bank A/c					40,000
	(Share Application money for 50,000 shares transferred to Share Capital Account and Securities Premium,  Rs 60,000 adjusted to Allotment and Rs 40,000 returned)
	Share Allotment A/c			Dr.		2,00,000
		To Share Capital A/c					2,00,000
	(Share Allotment money due on 50,000 shares @ Rs 4 per share)
	Bank A/c			Dr.		1,40,000
		To Share Allotment A/c					1,40,000
	(Share Allotment money received on share allotment)
	Share First and Final A/c			Dr.		1,50,000
		To Share Capital A/c					1,50,000
	(Share First and Final Call money due on 50,000 shares @ Rs 3 per share)
	Bank A/c			Dr.		1,48,500
		To Share First and Final A/c					1,48,500
	(Share First and Final Call money received from 49,500 shares @ Rs 3 per share and 500 shares failed to pay)
	Share Capital A/c (500×10)			Dr.		5,000
		To Share First and Final Call A/c (500×3)					1,500
		To Share Forfeiture A/c (500×7)					3,500
	(500 shares @ Rs per share fully paid up forfeited for the non- payment of Share First and Final Call Rs 3 per share)
	Bank A/c			Dr.		4,000
	Share Forfeiture A/c			Dr.		1,000
		To Share Capital A/c					5,000
	(500 Shares reissued @ 8 per share fully paid up)
	Share Forfeiture A/c			Dr.		2,500
		To Capital Reserve A/c					2,500
	(Balance of 500 shares in Forfeiture Account after adjustment, transferred to Capital Reserve Account)