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Question
AB Ltd. invited applications for issuing 75,000 equity shares of Rs.100 each at a premium of Rs.30 per share. The amount was payable as follows:
On Application and Allotment - Rs.85 per share (including premium)
On First and Final call - the balance amount
Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and shares were allotted on pro-rata basis to the remaining applicants. Excess money received on application and allotment was adjusted towards sums due to first and final call. The calls were made. A shareholder, who applied for 1,000 shares, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs.150 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of AB Ltd.
Solution
Journal Entries
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
|
Bank A/c Dr. To Share Application and Allotment A/c (Being share application and allotment received on 1,27,500 of Rs 85 each including Premium of Rs 30 each ) |
1,08,37,500
|
1,08,37,500
|
||
|
Share Application and Allotment A/c Dr. To Share Capital A/c To Securities Premium A/c To Bank A/c To Share First and Final Call A/c (Being share application of 75,000 shares transferred to share capital, share application and allotment on 27,500 shares refunded and rest is adjusted on share first and final call) |
1,08,37,500
|
41,25,000 22,50,000 23,37,500 21,25,000
|
||
|
Share First and Final Call A/c Dr. To Share Capital A/c (Being share first call due on 75,000 shares of Rs 45 each) |
33,75,000
|
33,75,000
|
||
|
Bank A/c Dr. To Share First and Final Call A/c (Being share first and final call received) |
12,37,500
|
12,37,500
|
||
|
Share Capital A/c Dr. To Share Forfeiture A/c To Share First and Final Call A/c (Being 750 share, were forfeiture for non- payment of share first and final call of Rs 45 each) |
75,000
|
62,500 12,500
|
||
|
Bank A/c Dr. To Share Capital A/c To Securities Premium A/c Being 750 forfeited share were re-issued at Rs 150 each fully paid up) |
1,12,500
|
75,000 37,500
|
||
|
Share Forfeiture A/c Dr. To Capital Reserve A/c (Being share forfeiture transferred to capital reserve) |
62,5000
|
62,500 |
| Category | Share Applied | Share Allotted | Money received on App. and Allot. @ Rs.85 each including premium of Rs.30 each | Money transfers to share capital @ Rs.85 each including premium of Rs.30 each | Money transfer to securities premium @ Rs.30 each | Excess Application and Allotment money | Share first and final call due @ Rs.45 each | Amount receivable on share first and final call after adjustment | Money Refunded |
| I | 27,500 | Nil | 23,37,500 | 23,37,500 | |||||
| II | 1,00,000 | 75,000 | 85,00,000 | 41,25,000 | 22,50,000 | 21,25,000 | 33,75,000 | 12,50,000 | - |
| 1,27,500 | 75,000 | 7,08,37,500 | 41,25,000 | 22,50,000 | 21,25,000 | 33,75,000 | 12,50,000 | 23,37,500 |
Those who applied for 1,00,000 share allotted =75,000 share.
Those who applied for 1,000 share, alloted = 75,000 x (1000/100000) = 750 shares
Share Application and Allotment received on 1,000 shares of Rs.85 each (including premium of Rs.30 each) = Rs.85,000
Shares Allotted (750 × 85) = Rs.63,750
Excess Application and Allotment money received = Rs.21,250
Share First and Final Call due on 750 shares of Rs.45 each = Rs.33,750
Excess Application and Allotment money received = Rs.21,250
Share First and Final Call not received = Rs.12,500 (33,750 – 21,250)
Therefore, Share First and final Call received = Rs.12,37,500 (12,50,000 – 12,500)
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| Journal of Roxy Ltd. (an extract) | ||||
| Date | Particulars | L. F. | Dr. (₹) | Cr. (₹) |
| 1. | Share First Call A/c ...Dr. | 28,000 | ||
| To Share Capital A/c | 28,000 | |||
| (Being first call due on ___??___ shares @ ₹ 2 each) | ||||
| 2. | Bank A/c ...Dr. | ?? | ||
| Calls in arrears A/c ...Dr. | 2,000 | |||
| To Share First Call A/c | 28,000 | |||
| (Being first call received on ___??___ shares) | ||||
| 3. | Share Capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | 4,000 | |||
| To Calls in Arrears A/c | ?? | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non-payment of first call) | ||||
| 4. | Share Second & Final Call A/c ...Dr. | 52,000 | ||
| To Share capital A/c | 52,000 | |||
| (Being second & final call due on ___??___ shares @ ₹ 4 each) | ||||
| 5. | Bank A/c ...Dr. | ?? | ||
| Calls in Arrears A/c ...Dr. | 10,000 | |||
| To Share Second & Final Call A/c | 52,000 | |||
| (Being second call received on ___??___ shares) | ||||
| 6. | Share capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | ?? | |||
| To Calls in Arrears A/c | 10,000 | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non payment of final call) | ||||
| 7. | Bank A/c ...Dr. | ?? | ||
| Share Forfeited A/c ...Dr. | ?? | |||
| To Share Capital A/c | ?? | |||
| (Being 1,500 forfeited shares including those on which the first call was not received reissued @ ₹ 6 per shares fully called) | ||||
| 8. | Share Forfeiture A/c (1,000 × 0) + (500 × 2) ...Dr. | ?? | ||
| To Capital Reserve A/c | ?? | |||
| (Being ___??___) | ||||
You are required to complete the journal entries by filling up the missing information represented by '??', including the number of shares and narration, if any.
