Advertisements
Advertisements
Question
EF Ltd. invited applications for issuing 80,000 equity shares of ₹ 50 each at a premium of 20%. The amount was payable as follows:
On Application: ₹ 20 per share (including premium ₹ 5)
On Allotment: ₹ 15 per share (including premium ₹ 5)
On First Call: ₹ 15 per share
On Second and Final call: Balance amount
Applications for 1,20,000 shares were received. Applications for 20,000 shares were rejected and pro-rata allotment was made to the remaining applicants.
Seema, holding 4,000 shares failed to pay the allotment money. Afterward, the first call was made. Seema paid allotment money along with the first call. Sahaj who had applied for 2,500 shares failed to pay the first call money. Sahaj's shares were forfeited and subsequently reissued to Geeta for ₹ 60 per share, ₹ 50 per share paid up. Final call was not made. Pass necessary journal entries for the above transactions in the books of EF Ltd. by opening a calls-in-arrears account.
Solution
Journal
| Date | Particulars | L.F. |
Debit Amount(₹) |
Credit Amount(₹) |
|
| Bank A/c | Dr. | 24,00,000 | |||
| To Share Application A/c | 24,00,000 | ||||
| (Being Application money received on 1,20,000 shares) | |||||
| Share Application A/c | Dr. | 24,00,000 | |||
| To Share Capital A/c (80,000 × 15) | 12,00,000 | ||||
| To Securities Premium A/c (80,000 × 5) | 4,00,000 | ||||
| To Share Allotment A/c | 4,00,000 | ||||
| To Bank A/c | 4,00,000 | ||||
| (Being application money adjusted and excess money on 20,000 shares refunded) | |||||
| Share Allotment A/c | Dr. | 12,00,000 | |||
| To Share Capital A/c | 8,00,000 | ||||
| To Securities Premium A/c | 4,00,000 | ||||
| (Being allotment due on 80,000 shares) | |||||
| Bank A/c | Dr. | 7,60,000 | |||
| Calls–in–Arrears A/c (4000 × 15 – 20,000) | Dr. | 40,000 | |||
| To Share Allotment A/c | 8,00,000 | ||||
| (Being Allotment money received and excess money on application adjusted) | |||||
| Share First Call A/c | Dr. | 12,00,000 | |||
| To Share Capital A/c | 12,00,000 | ||||
| (Being call money due) | |||||
| Bank A/c | Dr. | 11,70,000 | |||
| Calls–in–Arrears A/c (2000 × 15) | Dr. | 30,000 | |||
| To Share First Call A/c | 12,00,000 | ||||
| (Being first call money received) | |||||
| Bank A/c | Dr. | 40,000 | |||
| To Call–in–Arrears A/c | 40,000 | ||||
| (Being allotment money received on 4,000 shares) | |||||
| Share Capital A/c (2,000 × 40) | Dr. | 80,000 | |||
| To Share Forfeiture A/c (2000 × 25) | 50,000 | ||||
| To Calls–in–Arrears A/c | 30,000 | ||||
| (Being Sahaj’s share forfeited) | |||||
| Bank A/c | Dr. | 1,20,000 | |||
| To Share Capital A/c | 1,00,000 | ||||
| To Securities Premium A/c | 20,000 | ||||
| (Being Sahaj’s shares reissued for ₹ 60 per share and (₹) 50 paid up) | |||||
| Share Forfeiture A/c | Dr. | 50,000 | |||
| To Capital Reserve A/c | 50,000 | ||||
| (Being amount transferred on shares reissued) |
Computation Table
| Categories | Shares Applied |
Shares |
Money received on Application @ (₹) 20 | Money Transferred to Share Capital @ (₹) 15 | Money Transferred to Securities Premium @ (₹) 5 | Allotment due @ (₹) 15 | Excess on Application | Refund |
| I | 20,000 | Nil | 4,00,000 | - | - | - | - | 4,00,000 |
| II | 1,00,000 | 80,000 | 20,00,000 | 12,00,000 | 4,00,000 | 12,00,000 | 4,00,000 | - |
| 1,20,000 | 80,000 | 24,00,000 | 12,00,000 | 4,00,000 | 12,00,000 | 4,00,000 | 4,00,000 |
| Shares Allotted | Shares Applied | Excess on Application | |
| Seema’s Shares (Category II) | 4,000 | 5,000 ( 4,000 × 1,00,000/80,000) |
20,000 |
| Sahaj’s Shares (Category II) |
2,000 (2,500 × 80,000/1,00,000) |
2,500 | - |
APPEARS IN
RELATED QUESTIONS
XYZ Ltd. invited applications for 40,000 equity shares of Rs.100 each at a discount of 6%. The amount was payable as follows:
On Application and Allotment - Rs.90 per share
On First and Final call - the balance amount.
Applications for 60,000 shares were received. Applications for 10,000 shares were rejected and shares were allotted on pro-rata basis to remaining applicants. Excess application money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. A shareholder, who applied for 50 share, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were re-issued at Rs.97 per share fully paid up. Pass necessary journal entries for the above transactions in the books of XYZ Ltd.
On 1st May,2014, Directors of a Limited Company forfeited 200 shares of ₹ 20 each , ₹ 15 per share called-up, on which ₹ 10 per share has been paid by A , the amount of the first call of ₹ 5 per share being unpaid . Ten days Later, the Directors reissued the forfeited shares to B credited as ₹ 15 per share paid-up , for a payment of ₹ 10 per share.
Give journal entries in the company's books to record the forfeited shares and their reissue.
X Ltd . forfeited 100 shares of ₹ 10 each (₹ 8 called-up) issued at a premium of ₹ 2 per share to Mr. R, on which he had paid applications money of ₹ 5 per share , for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 70 shares were reissued to Mr . Sanjay as ₹ 8 called-up for ₹ 7 per share. Give necessary journal entries relating to forfeiture and reissue of shares.
Software Ltd. company with registered capital of ₹ 5,00,000 in shares of ₹ 10 each issued 20,000 of such shares payable ₹ 2 on application, ₹ 4 on allotment, ₹ 2 on first call ₹ 2 on final call. All the money payable on allotment was duly received but on the first call being made, one shareholder paid the entire balance on his holding of 300 shares and five shareholders with a total holding of 1,000 shares failed to pay their dues on the first call. These shares were forfeited for non-payment of first call money. Final call was made and all the money due was received. Later on, forfeited shares were reissued @ ₹ 6 per share as fully paid-up.
Record the above in the company's Journal and prepare the Balance Sheet.
A share of ₹ 100 issued at a premium of ₹ 10 on which ₹ 80 (including premium) was called and ₹ 60 (including premium) was paid, has been forfeited. This share was afterwards reissued as fully paid-up for ₹ 70 . Give Journal entries to record the above.
VT Ltd forfeited 200 shares of ₹ 10 each , issued at a premium of ₹ 5 per share , held by Mohan for non-payment of the final call of ₹ 3 per share . 100 out of these shares were reissued to Narendra at a discount of ₹ 4 per share . Journalise.
JCV Ltd., forfeited 200 shares of ₹ 10 each issued at a premium of ₹ 2 per share for the non-payment of allotment money of ₹ 3 per share (including premium). The first and final call of ₹ 4 per share has not been made as yet . 50% of the forfeited shares were reissued at ₹ 8 per share as fully paid-up . Pass necessary Journal entries for the forfeiture and reissue of shares.
Himalaya Company Limited issued for public subscription 1,20,000 equity shares of ₹ 10 each at a premium for ₹ 2 per share payable as under:
| With Application | --- | ₹ 3 per share, |
| On allotment (including premium) | -- | ₹ 5 per share, |
| On First call | -- | ₹ 2 per share |
| On Second and Final call | -- | ₹ 2 per share. |
Applications were received for 1,60,000 shares . Allotment was made on pro rata basis . Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited after the second call was made . All the shares forfeited were reissued to Teena as fully paid at ₹ 7 per share.
Record journal entries and show the transactions relating to share capital in the company's Balance Sheet.
The balance of share forfeited account after the reissue of forfeited shares is transferred to ______.
Those companies whose shares are listed on a recognised stock exchange for public trading ______.
Which of the following is a free reserve?
Vishnu Ltd. forfeited 20 shares of ₹10 each, ₹8 called up, on which John had paid application and allotment money of ₹5 per share, of these, 15 shares were reissued to Parker as fully paid up for ₹6 per share. What is the balance in the share Forfeiture Account after the relevant amount has been transferred to Capital Reserve Account?
When shares are forfeited, the Share Capital Account is debited with the:
If the loss on the re-issue of shares is less than the amount forfeited, the 'surplus' or profit is transferred to:
Forfeiture of shares results in the reduction of:
Radhe Ltd. forfeited 500 shares of ₹ 10 each fully called up for non-payment of final call of ₹ 3 per share. 300 of these shares were reissued at ₹ 8 per share as fully paid-up. The amount credited to Capital Reserve Account was:
An equity share of ₹10 fully called up on which ₹ 6 has been paid was forfeited for the non-payment of the balance amount. At which of the following minimum price can it be reissued?
Roxy Ltd. issued Equity shares of 10 each payable as:
₹ 4 on Application and Allotment; ₹ 2 on First Call; ₹ 4 on Second and Final Call.
Following is an extract of the Journal of Roxy Ltd.
| 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.
