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Question
'BMY Ltd.' invited applications for issuing 1,00,000 equity shares of Rs 10 each at a premium of `10 per share. The amount was payable as follows :
On application - Rs 10 per share (including Rs 5 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 300 shares paid the full share money with
an application. Another shareholder holding 200 shares failed to pay the allotment money. His shares were forfeited. Later on, these shares were re-issued for Rs 4,000 as fully paid up.
Pass necessary journal entries for the above transaction in the books of BMY Ltd.
Solution
| In the books of BMY Ltd Journal Entry |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
Bank A/c Dr. To Equity Share Application and Allotment A/c (Being amount received on an application for 1,00,000 shares along with allotment money on 300 shares) |
10,03,000
|
10,03,000
|
||
|
Equity Share Application and Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c To Calls-in-Advance A/c (Being amount of application transferred to Share Capital and securities premium) |
10,03,000
|
5,00,000 5,00,000 3,000
|
||
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being amount due on allotment) |
10,00,000
|
5,00,000 5,00,000
|
||
|
Bank A/c (10,00,000 – 3,000 – 2,000) Dr. Calls – in – Advances A/c Dr. To Equity Share Allotment A/c (Being amount received on share allotment) |
9,95,000 3,000
|
9,98,000
|
||
|
Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Equity Share Forfeiture A/c To Equity Share Allotment A/c (Being 200 shares forfeited) |
2,000 1,000
|
1,000 2,000
|
||
|
Bank A/c Dr. To Equity Share Capital A/c] To Securities Premium A/c (Being forfeited shares were reissued for Rs.4,000) |
4,000
|
2,000 2,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital reserve) |
1,000
|
1,000
|
||
Working Notes:
WN1: Calculation of Amount received on Application
Application amount received on 1,00,000 share = 1000000
Shareholders of 300 shares paid in advance (300 x 10) = 3000
Total amount = 10,03,000
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| To share Forfeited A/c | ₹Y | ||
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Based on the below information, you are required to answer the following question:
|
Nidiya Limited was incorporated on 1st April 2017 with a registered office in Mumbai. The capital clause of the memorandum of Association reflected a registered capital of 8,00,000 equity shares of ₹ 10 each and 1,00,000 preference shares of ₹ 50 each. Since some large investments were required for building and machinery the company in consultation with vendors, M/s VPS Enterprises, issued 1,00,000 equity shares and 20,000 preference shares at par with them in full consideration of assets acquired. Besides this, the company issued 2,00,000 equity shares for cash at par payable as ₹ 3 on application, 2 on the allotment, 3 on the first call and 2 on the second call. Till date, the second call has not yet been made and all the shareholders have paid except Mr. Ajay who did not pay allotment and calls on his 300 shares and Mr. Vipul who did not pay the first call on his 200 shares. Shares of Mr. Ajay were then forfeited and out of the 100 shares were reissued at ₹ 12 per share. |
What amount of share forfeiture would be reflected in the balance sheet?
Aysha Ltd. forfeited 1,10,000 shares of ₹ 10 each issued at 20% premium for the non-payment of first call of ₹ 2 per share and final call of ₹ 3 per share, Share Forfeited Account will be credited with ______.
Savi Ltd. forfeited 50 shares of ₹ 100 each issued at a premium of 10%, on which allotment money of ₹ 30 per share (including premium) and first and final call of ₹ 40 per share were not received.
What is the minimum amount per share at which the company can reissue these shares?
Assertion: A company can reissue a forfeited share at an amount which is less than the amount not received on it.
Reason: A company can write off the net loss made on the reissue of a forfeited share from its capital reserve.
Which one of the following is correct?
