Question

K.N. Ltd. invited applications for issuing 6,00,000 equity shares of ₹ 10 each at a premium of ₹ 3 per share. The amount was payable as follows: On Application and Allotment - ₹ 3 per share; On First Call - ₹ 4 per share; On Second and Final Call - Balance (including premium). The issue was oversubscribed by 1,50,000 shares. Applications for 50,000 shares were rejected and the application money was refunded. Shares were allotted to the remaining applicants as follows:

Category I: Those who had applied for 4,00,000 shares were allotted 3,00,000 shares on pro-rata basis.

Category II: The remaining applicants were allotted the remaining shares. Excess application money received with applications was adjusted towards sums due on first call. Rakesh, to whom 6,000 shares were allotted (out of Category I) failed to pay the first call money. His shares were forfeited. The forfeited shares were re-issued at ₹ 13 per share, fully paid up after the second call. Pass necessary journal entries for the above transactions in the books of K.N. Ltd.

Answer 1

Journal Entries
Date	Particulars	Debit	Credit
1.	Bank A/c     ...Dr.	22,50,000
	To Share Application and allotment A/c		22,50,000
	(Being Application and allotment money received)
2.	Share Application and allotment A/c     ...Dr.	22,50,000
	To Equity Share Capital A/c		18,00,000
	To Share First call A/c		3,00,000
	To Bank A/c		1,50,000
	(Being application and allotment money adjusted and excess refunded)
3.	Share 1st Call A/c     ...Dr.	24,00,000
	To Equity Share Capital A/c		24,00,000
	(Being call money due)
4.	Bank A/c     ...Dr.	20,82,000
	Calls In arrears A/c     ...Dr.	18,000
	To Share 1st Call A/c		21,00,000
	(Being call money received except on 6,000 shares)
5.	Share Capital A/c     ...Dr.	42,000
	To Shares Forfeited A/c		24,000
	To Calls in arrears		18,000
	(Being 6000 shares forfeited)
6.	Share 2nd Call A/c     ...Dr.	35,64,000
	To Share Capital A/c		17,82,000
	To Securities Premium A/c		17,82,000
	(Being 2nd Call money due)
7.	Bank A/c     ...Dr.	35,64,000
	To Share 2nd Call A/c		35,64,000
	(Being 2nd Call money received)
8.	Bank A/c       ...Dr.	78,000
	To Share Capital A/c		60,000
	To Securities Premium A/c		18,000
	(Being forfeited shares reissued)
9.	Shares Forfeited A/c     ...Dr.	24,000
	To Capital Reserve A/c		24,000
	(Being balance transferred to capital reserve)