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Question
GY Ltd. invited applications for issuing 85,000 equity shares of Rs 10 each at a discount of 10%. The amount was payable as follows:
On applications and allotment - Rs 4 per share
On first and final call - the balance amount
Application for 2,00,000 shares was received. Applications for 30,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. All money was received except on 1,700 shares applied by Hari. His shares were forfeited. The forfeited shares were re-issued at the maximum discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of the company.
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 2,00,000 of Rs 4 each including the discount of 10% ) |
8,00,000
|
8,00,000
|
||
|
Share application and allotment A/c Dr. Discount on issue A/c Dr. To share capital A/c To Bank A/c To share First and Final Call A/c (Being share application and allotment on 30,000 shares refunded and excess application money adjusted on share first and final call) |
8,00,000 85,000
|
4,25,000 1,20,000 3,40,000
|
||
|
Share First and Final Call A/c Dr. To share capital A/c (Being share first and final Call due on 85,000 shares of Rs 5 each) |
4,25,000
|
4,25,000
|
||
|
Bank A/c Dr. To Share First and Final Call A/c (Being share first and final call received) |
84,150
|
84,150
|
||
|
Share Capital A/c Dr. To Share Forfeiture A/c To Share Forfeiture A/c To Discount issue of Share A/c (Being 850 share were forfeited for non-payment of share first and final of Rs 5 each) |
8,500
|
6,800 850 850
|
||
|
Bank A/c Dr. Discount on issue A/c Dr. Share forfeited A/c Dr. To share capital A/c (Being 850 forfeited share were re-issued as the maximum permissible amount of discount by law) |
850 850 6,800
|
8,500
|
||
| Computation Table | |||||||||
| Category | Share Applied |
Share Allotted |
Money received on Applications and Allotment @ Rs 4 each |
Money transfers to share capital@ Rs 5 each including Discount of 10% |
Money |
Excess Application on 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 | 30,000 | Nil | 1,20,000 |
|
1,20,000 | ||||
| II | 1,70,000 | 85,000 | 6,80,000 | 4,25,000 |
85,000 |
3,40,000 | 4,25,000 | 85,000 | |
| 2,00,000 | 85,000 | 8,00,000 | 4,25,000 |
85,000 |
3,40,000 | 4,25,000 | 85,000 | 1,20,000 | |
Working Note:
Those who applied for 1,70,000 shares, allotted = 85,000 Shares
Those who applied for 1,700 shares, allotted = `85000xx 17500/170000` = 850 shares
Share Application and Allotment received on 1,700 glares of Rs 4 each = Rs 6,800
Shares Allotted (850 × 4) = Rs ,400
Excess Application and Allotment money received = Rs 3,400
Share First and Final Call due on 850 shares of Rs 5 each = Rs 4,250
Excess Application and Allotment money received = Rs 3,400
Share First and Final Call not received = Rs 850 (4,250- 3,400)
Therefore, Share First and final Call received = Rs 84,150 (85,000 - 850)
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|
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. |
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Lilly Ltd. forfeited 100 shares of ₹ 10 each issued at 10% premium (₹ 8 called up ) on which a shareholder did not pay ₹ 3 of allotment (including premium) and first call of ₹ 2. Out of these 60 shares were reissued to Ram as fully paid for ₹ 8 per share and 20 shares to Suraj as fully paid up @ ₹ 12 per share at different intervals of time.
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MV Ltd. was registered with a capital of ₹ 2,00,000 divided into 10,000 Equity shares of ₹ 20 each payable as follows:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 7 per share |
| On First & Final Call | ₹ 8 per share |
The company offered 5,000 shares to the public for subscription. It received applications for 6,700 shares.
From amongst the applicants:
- Vimal, who had applied for 1,500 shares, paid ₹ 7,500 on application, but was allotted only 800 shares.
- Abhay, who had applied for 2,000 shares, paid the full amount of ₹ 40,000 with his application, but was allotted only 1,000 shares.
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- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Abhay was used towards allotment and call and any surplus beyond the call was refunded.
The company forfeited Nitin's shares after the final call.
You are required to pass journal entries to record the above transactions in the books of the company.
