Question

Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the following terms :

Payable on application	Rs 5 per share
Payable on allotment	Rs 3 per share
Payable on first and final call	Rs 2 per share

Applications for 5,00,000 shares were received. It was decided :

(a) to refuse allotment to the applicants for 20,000 shares;

(b) to allot in full to applicants for 80,000 shares;

(c) to allot the balance of the available shares’ pro-rata among the other applicants; and

(d) to utilise excess application money in part as payment of allotment money.

One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ Rs 9 per share. Show the journal and prepare Cash book to record the above.

 

Answer 1

In the books of Alfa Limited

Journal

 

Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Share Application A/c		Dr.		24,00,000
		To Share Capital A/c				20,00,000
		To Share Allotment A/c				4,00,000
	(Share Application money adjusted)
	Share Allotment A/c		Dr.		12,00,000
		To Share Capital A/c				12,00,000
	(Share Allotment money due)
	Share First and Final Call A/c		Dr.		8,00,000
		To Share Capital A/c				8,00,000
	(Share First and Final Call due)

Working Note:

1. Number of shares apllied by applicant 

= ${\displaystyle \frac{\text{Total number of applied shares}}{\text{Total number of alloted shares}}\times \text{No. of shares alloted}}$

${\displaystyle \frac{\text{4,00,000}}{\text{3,20,00}}\times \text{400 =500 shares}}$

2. Call in arrears by applicant on allotment

Money received on Application	(500×5)	=	2,500
Less: Amount adjusted on Application	(400×5)	=	2,000
Amount adjusted on Allotment			50

3.

Money due on Allotment	(400×3)	1,200
	Less: Money adjusted		500
	Balance due on Allotment		700

Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Share Capital A/c		Dr.		4,000
		To Share Allotment A/c				700
		To Share First & Final Call A/c				800
		To Share Forfeiture A/c				2,500
	(400 shares forfeited)
	Share Forfeiture A/c		Dr.		400
		To Share Capital A/c				400
	(Share reissued and loss on issue charged from Share Forfeiture Account)
	Share Forfeiture A/c		Dr.		2,100
		To Capital Reserve A/c				2,100
	(Share Forfeiture Account transferred to Capital Reserve Account)

Cash Book (Bank Column)

Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
	Share Application		25,00,000		Share Application		1,00,000
	Share Allotment		7,99,300		Balance c/d		40,02,100
	Share First and Final Call		7,99,200
	Share Capital		3,600
			41,02,100				41,02,100