Question

Kavya Ltd. invited applications for issuing 30,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:

On application and allotment ₹ 7 per share

On first and final call, ₹ 5 per share (including ₹ 2 premium)

Applications were received for 33,000 shares. Applications for 3,000 shares were rejected and money returned to the applicants. Applications for 30,000 shares were accepted in full.

The application and allotment money was duly received. The first and final call was made and money received except from a shareholder holding 500 shares. His shares were forfeited. All these shares were re-issued to Kartik as fully paid for ₹ 8 per share.

Pass necessary journal entries for the above transactions in the books of Kavya Ltd. Open calls-in-arrears account wherever required.

Answer 1

Journal Entries
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
	Bank A/c   ...Dr.		2,31,000
	To Share Application and Allotment A/c			2,31,000
	(Being money received on 33,000 shares)
	Share Application and Allotment A/c   ...Dr.		2,31,000
	To Share Capital A/c			2,10,000
	To Bank A/c			21,000
	(Being application and allotment money adjusted)
	Share First and Final Call A/c   ...Dr.		1,50,000
	To Share Capital A/c			90,000
	To Securities Premium A/c			60,000
	(Being money on call due with premium)
	Bank A/c   ...Dr.		1,47,500
	Calls-in-arrears A/c   ...Dr.		2,500
	To Share First and Final Call A/c			1,50,000
	(Being money received on 29,500 shares)
	Share Capital A/c   ...Dr.		5,000
	Securities Premium A/c   ...Dr.		1,000
	To Calls-in-arrears A/c			2,500
	To Share Forfeiture A/c			3,500
	(Being 500 shares forfeited)
	Bank A/c   ...Dr.		4,000
	Share Forfeiture A/c   ...Dr.		1,000
	To Share Capital A/c			5,000
	(Being 500 shares re-issued)
	Share Forfeiture A/c   ...Dr.		2,500
	To Capital Reserve A/c			2,500
	(Being profit transferred to capital reserve account)