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Question
BBG Ltd. had issued 1,00,000 equity shares of Rs.10 each at a premium of Rs.3 per share payable with application money. While passing the journal entries related to the issue, some blanks are left. You are required to complete these blanks.
Books of BBG Ltd
Journal
| Date | Particulars | L.F. | Dr.(Rs.) | Cr.(Rs.) |
|
2015 Jan 05
|
_ _ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (Amount received on application for 1,40,000) shares @ Rs.6 per share including premium) |
|||
|
Jan 17
|
Equity Share Application A/c Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Transfer of application money to share capital securities premium, money refunded for 20,000 shares for rejected application and balance adjusted towards amount due on allotment as shares were allotted on Pro-rata basis) |
|||
|
Jan 17
|
_ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Amount due on allotment @ Rs.4 per share) |
|||
|
Feb 20
|
_ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Balance amount received on allotment) |
|||
|
April 01
|
_ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (First and Final Call money due) |
|||
|
April 20
|
_ _ _ _ _ _ _ _ _ _ Dr Calls – in – arrears A/c Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Money received on First and Final Call) |
3,000
|
||
|
May 20
|
_ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ (Forfeited the shares on which call money was not received) |
|||
|
June 15
|
_ _ _ _ _ _ _ _ _ _ Dr _ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ (Re-issued the forfeited shares) |
3,000
|
||
| _ _ _ _ _ |
_ _ _ _ _ _ _ _ __ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ (_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ __ ) |
Solution
Books of BBG Ltd
Journal
| Date | Particulars | L.F. | Dr.(Rs.) | Cr.(Rs.) |
|
2015 Jan 05
|
Bank A/c (1,40,000 x 6) Dr To To Equity Share Application A/c (Being amount received on application for 1,40,000 shares @ Rs.6 per share including premium) |
8,40,000
|
8,40,000
|
|
|
Jan 17
|
Equity Share Application A/c Dr To Equity Share Capital A/c (1,00,000 x Rs.3) To Securities Premium A/c (1,00,000 x Rs.3) To Equity Share Allotment A/c (20,000 x Rs.6) To Bank a/c (20,000 x Rs.6) (Being transfer of application money to share capital securities premium, money refunded for 20,000 shares for rejected application and balance adjusted towards amount due on allotment as shares were allotted on Pro-rata basis) |
8,40,000
|
3,00,000 3,00,000 1,20,000 1,20,000
|
|
|
Jan 17
|
Equity Share Allotment A/c (1,00,000 x Rs.4) Dr To Equity Share Capital A/c (Being amount due on allotment @ Rs.4 per share) |
4,00,000
|
4,00,000
|
|
|
Feb 20
|
Bank A/c (Rs.4,00,000 - Rs.1,20,000) Dr To Equity Share Allotment A/c (Being balance amount received on allotment) |
2,80,000
|
2,80,000
|
|
|
April 01
|
Equity Share First & Final Call (1,00,000 x Rs.3) Dr To Equity Share Capital A/c (Being First and Final Call money due) |
3,00,000
|
3,00,000
|
|
|
April 20
|
Bank A/c Dr Calls – in – arrears A/c Dr To Equity Share First and Final Call A/c (Being money received on First and Final Call) |
2,97,000 3,000
|
3,00,000
|
|
|
May 20
|
Equity Share Capital A/c Dr To Equity Share Forfeiture A/c (1,000 x Rs.7) To Equity Share First & Final Call A/c (1,000 x Rs.3) (Being shares forfeited on which call money was not received) |
10,000
|
7,000 3,000
|
|
|
June 15
|
Bank A/c (1,000 x Rs.7) Dr Equity Share Forfeiture A/c Dr To Equity Share Capital A/c (Being share forfeited reissued) |
7,000 3,000
|
10,000
|
|
| June 15 |
Equity Share Forfeiture A/c Dr To Capital Reserve A/c (Being amount transferred to Capital Reserve) |
4,000
|
4,000
|
APPEARS IN
RELATED QUESTIONS
If shares are issued at its face value, it is called as issue at
RS Ltd. has issued 25000 equity shares of Rs. 10 each at a premium of Rs. 2 per hares payable with application money. The incomplete journal entries related to the issue are given below. You are required to complete these blanks.
Books of RS Ltd.
Journal
| Date | Particulars | L.F. | Dr.(Rs.) | Cr.(Rs.) |
|
2015 Jan 10
|
_ _ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (Amount received on application for 35,000 shares @ Rs.5 per share) |
|||
|
Jan 16
|
_ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Transfer of application money to share capital securities premium, money refunded for 4,000 shares for rejected application and balance adjusted towards amount due on allotment as shares were allotted on Pro-rata basis) |
|||
|
Jan 31
|
_ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Amount due on allotment @ Rs.4 per share) |
|||
|
Feb 20
|
_ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Balance amount received on allotment) |
|||
|
April 01
|
_ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (First and Final Call money due) |
|||
|
April 20
|
_ _ _ _ _ _ _ _ _ _ Dr Calls – in – arrears A/c Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ (Money received on First and Final Call except on 500 shares) |
|||
|
Aug 27
|
_ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ (Forfeited the shares on which call money was not received) |
|||
|
Oct 3
|
_ _ _ _ _ _ _ _ _ _ Dr _ _ _ _ _ _ _ _ _ _ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ (Re-issued the forfeited shares @ 8 per share fully paid - up) |
|||
| _ _ _ _ _ |
_ _ _ _ _ _ _ _ __ Dr To _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ (_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ __ ) |
Sandesh Ltd. took over the assets of Rs.7,00,000 and liabilities of Rs.2,00,000 from Sanchar Ltd. for a purchase consideration of Rs.4,59,500. Rs.8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of `10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.
K Ltd. took over the assets of Rs.15,00,000 and liabilities of Rs.5,00,000 of P Ltd. For a purchase consideration of Rs.13,68,500. Rs.25,500 were paid by issuing a promissory note in favour of P Ltd. Payable after two months and the balances was paid by issue of equity shares of Rs.100 each at a premium of 25%.
Pass necessary journal entries for the above transactions in the books of K Ltd.
To provide employment to the youth and to develop Baramula district of Jammu and Kashmir, Jyoti Power Ltd. decided to setup a power plant. For raising funds the company decided to issue 8,50,000 equity shares of Rs.10 each at a premium of Rs.3 per share. The whole amount was payable on application. Applications for 20,00,000 shares were received. Applications for 3,00,000 shares were rejected and shares were alloted to the remaining applicants on pro- rata basis.
Pass necessary journal entries for the above transactions in the books of the company and identify any two values which the company wants to propagate.
Samachar India Ltd. took over the assets of Rs 14,00,000 and liabilities of Rs 4,00,000 from News Ltd. for a purchase consideration of Rs 9,19,000. Samachar India Ltd. issued a promissory note of Rs 17,000 payable after 60 days in favour of News Ltd. and the balance amount was paid by issue of equity shares of Rs 100 each at a premium of Rs 25 per share.
Pass necessary Journal entries for the above transactions in the books of Samachar India Ltd.
Y. Ltd forfeited 1,00 equity shares of Rs 10 each for the non-payment of the first call of Rs 2 per share. The final call of Rs2 per share was yet to be made.
Calculate the maximum amount of discount at which these shares can be reissued.
State any three conditions for the issue of shares at discount.
Pass necessary journal entries for the following transactions in the books of Sewak Ltd.:
(i) Sewak Ltd. acquired assets of Rs 5,00,000 and liabilities of Rs 3,00,000 of Goodwill Ltd. for a purchase consideration of Rs 1,35,000. Payment to Goodwill Ltd. was made by issuing equity shares of 10 each at a discount of 10%.
(ii) Purchase furniture of Rs 5,00,000 from Ramprastha Ltd. The payment to Ramprastha Ltd. was made by issuing equity shares of Rs 10 each at a premium of 25%.
Answer in one Sentence only :
What is meant by discount on issue of shares?
Give one word / Term / phrase for the following statement :
Issue of share above face value.
(Issue at discount and Pro-rate allotment)
Global IT Ltd. issued 1,00,000 shares of 10 each at a discount of 10% payable as follows-
| On Application | Rs 3 | On Allotment | Rs 3 (Discount) |
| On First Call | Rs 2 | On Second Call | Rs 1 |
Public applied for 1,20,000 shares and the directors made pro-rata allotment to the applicants.
Show the journal of the company assuming that all money received on allotment and calls.
State, whether the following statements is True or False.
Shares are always issued at par.
State, whether the following statements is True or False.
A public company can issue shares at only rate of discount.
Premier Tools Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:
On application - ₹ 5 per share (including premium)
On allotment - ₹ 3 per share
On first & final call – Balance
Applications were received for 2,50,000 shares. Applications for 10,000 shares were rejected and pro-rata allotment was made to the remaining applicants. Over payments received on application were adjusted towards sums due on allotment.
All calls were made and duly received except allotment and first and final call from Naveen who applied for 7,200 shares. His shares were forfeited. Half of the forfeited shares were reissued for ₹ 48,000 as fully paid.
Pass the necessary journal entries for the above transactions in the books of Premier Tools Ltd. Open calls-in-arrears account wherever required.
