Question

Chand Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount per share was payable as follows: ₹ 4 (including premium) on application, ₹ 5 on allotment and balance on first and final call. Applications were received for 1,80,000 shares of which applications for 30,000 shares were rejected and remaining applicants were allotted shares on pro-rata basis. Mansi holding 5,000 shares failed to pay first and final call money and her shares were forfeited.

Pass necessary Journal entries for the above transactions in the books of the company. 

Answer 1

In the books of Chand Ltd. Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		7,20,000	-
	To Share Application A/c		-	7,20,000
	(Application money received on 1,80,000 shares)
2.	Share Application A/c   ...Dr.		7,20,000	-
	To Share Capital A/c		-	2,00,000
	To Securities Premium A/c		-	2,00,000
	To Share Allotment A/c		-	2,00,000
	To Bank A/c		-	1,20,000
	(Amount transferred to share capital and excess adjusted)
3.	Share Allotment A/c   ...Dr.		5,00,000	-
	To Share Capital A/c		-	5,00,000
	(Allotment due)
4.	Bank A/c   ...Dr.		3,00,000	-
	To Share Allotment A/c		-	3,00,000
	(Allotment money received)
5.	Share First & Final Call A/c   ...Dr.		3,00,000	-
	To Share Capital A/c		-	3,00,000
	(Call money due)
6.	Bank A/c   ...Dr.		2,85,000	-
	Call in Arrears A/c   ...Dr.		15,000	-
	To Share First & Final Call A/c		-	3,00,000
	(Call money received)
7.	Share Capital A/c   ...Dr.		50,000	-
	To Share forfeiture A/c		-	35,000
	To Call in arrear A/c		-	15,000
	(Being shares forfeited)

Working note:

Amount received on allotment = 5,00,000 − 2,00,000 = ₹ 3,00,000