Question

Bharat Ltd . invited applications for issuing 2,00,000 Equity Shares of ₹  10 each. The amount was payable as:
On application ₹  3 per share , on allotment ₹  5 per share and on first and final call ₹  2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were  allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted  50,000 shares on pro rata basis.
Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment . Sharma, who had  applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call . His shares  were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ ₹ 8 per share . The reissued shares included all the forfeited shares of Bajaj.
Give necessary  journal entries to record the above transactions. 

Answer 1

Issued capital 2,00,000 shares of Rs 10 each.

Applied shares 3,00,000

Allotment made as:				Payable as:
Applied		Allotted		Application	Rs 3
2,00,000		1,50,000		Allotment	Rs 5
1,00,000		50,000		First and Final Call	Rs 2
3,00,000		2,00,000			Rs 10	per share

Books of Bharat Ltd.

Journal

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		9,00,000
	To Equity Share Application A/c				9,00,000
	(Application money received for 3,00,000 shares at Rs 3 each)
	Equity Share Application A/c	Dr.		9,00,000
	To Equity Share Capital A/c				6,00,000
	To Equity Share Allotment A/c				3,00,000
	(Application money of 2,00,000 shares at Rs 3 each transferred to Shares Capital and excess money Rs 3,00,000 adjusted on allotment)
	Equity Share Allotment A/c	Dr.		10,00,000
	To Equity Share Capital A/c				10,00,000
	(Allotment due on 2,00,000 shares at Rs 5 each)
	Bank A/c	Dr.		6,88,000
	To Equity Share Allotment A/c				6,88,000
	(Allotment received on 1,97,000 shares)
	Equity Share Capital A/c	Dr.		24,000
	To Share Forfeiture A/c				12,000
	To Share Allotment A/c				12,000
	(3,000 shares forfeited for the non-payment of money due on allotment)
	Equity Share First and Final Call A/c	Dr.		3,94,000
	To Equity Share Capital A/c				3,94,000
	(First and Final call due on 1,97,000 shares at Rs 2 per share)
	Bank A/c			3,92,000
	To Equity Share First and Final Call A/c				3,92,000
	(Share First and Final Call received on 1,97,000 shares)
	Equity Share Capital A/c	Dr.		10,000
	To Share Forfeiture A/c				8,000
	To Equity Share First and Final Call A/c				2,000
	(1,000 shares forfeited for the non-payment of first and final call)
	Bank A/c	Dr.		28,000
	Share Forfeiture A/c	Dr.		7,000
	To Equity Share Capital A/c				35,000
	(3,500 shares of Rs 10 each re-issued at Rs 8 per share fully paid-up)
	Share Forfeiture A/c	Dr.		9,000
	To Capital Reserve A/c				9,000
	(Balance in Share Forfeiture of 3,500 re-issued shares transferred to Capital Reserve)

Working Note:

Bajaj’s Share

Number of shares applied = ${\displaystyle \frac{200000}{150000}\times 3000=4000\text{Shares}}$

Money received on Application (4,000 shares × Rs 3)	=	12,000
Less: Money transferred to Shares capital (3000 shares × Rs 3)	=	9,000
Excess money on Application		3,000

 

Allotment due (3,000 shares × Rs 5)	=	15,000
Less: Excess money on application	=	3,000
Calls-in-Arrears on Allotment		12,000

Share Allotment

Money due an allotment (2,00,000 shares × Rs 5)	=	10,00,000
Less: Excess money on Application	=	3,00,000
Less: Calls-in-Arrears on Bajaj’s shares	=	12,000
Money received on Allotment	=	Rs 6,88,000

Sharma’s shares

Number of shares allotted =${\displaystyle \frac{50000}{100000}\times 2000=1000\text{Shares}}$

Capital Reserve

Forfeiture of shares held by Bajaj 

Share Forfeiture Credit ${\displaystyle \frac{12000}{3000}}$	=	Rs 4 per shares
Share Forfeiture Debit on re-issue	=	Rs 2	per share
Share Forfeiture after re-issue		Rs 2	per share

 

Capital Reserve on re-issue of Bajaj’s shares	=	Rs 2 × 3,000 (no. of shares re-issued)
	=	Rs 6,000

Forfeiture of shares held by Sharma

Share Forfeiture Credit	Rs 8	per share
Share Forfeiture Debit on re-issue	Rs 2	per share
	Rs 6	per share

Capital Reserve on re-issue of 500 Shares of Sharma = Rs 6 × 500 (no. of shares re-issued) = Rs 3,000

Total Capital Reserve on 3,500 shares = 6,000 (re-issue of Bajaj’s) + 3,000 (re-issue of Sharma’s) = Rs 9,000