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Question
HCF Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each at a discount of 10%. The amount was payable as follows:
On application and allotment – 4 per share
On first and final call – the balance amount.
Applications for 2,00,000 share were received. Applications for 50,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made and was duly received except on 1,500 share applied by Raja. His share were forfeited. The forfeited shares were re-issued at maximum discount permissible under law.
Pass necessary journal entries for the above transactions in the books of the company.
Solution
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Journal Entry |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Bank A/c |
Dr. |
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8,00,000 |
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To Equity Share Application and Allotment A/c |
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8,00,000 |
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(Share application and allotment received on 2,00,000 of Rs 4 each excluding discount of Re 1 each) |
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Equity Share Application and Allotment A/c |
Dr. |
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8,00,000 |
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Discount on issue of Shares A/c |
Dr. |
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75,000 |
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To Equity Share Capital A/c |
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3,75,000 |
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To Bank A/c |
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2,00,000 |
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To Equity Share First and Final Call A/c |
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3,00,000 |
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(Share application of 75,000 shares transferred to share capital , share application and allotment on 50,000 shares refunded and rest is adjusted on share first and final call) |
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Equity Share First and Final Call A/c |
Dr. |
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3,75,000 |
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To Equity Share Capital A/c |
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3,75,000 |
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(Share first and final call due on 75,000 shares of Rs 5 each) |
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Bank A/c |
Dr. |
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74,250 |
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Calls-in-Arrears A/c |
Dr. |
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750 |
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To Equity Share First and Final Call A/c |
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75,000 |
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(Share first and final call received) |
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Equity Share Capital A/c |
Dr. |
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7,500 |
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To Discount on issue of shares A/c |
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750 |
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To Share Forfeiture A/c |
Dr. |
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6,000 |
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To Calls-in-Arrears A/c |
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750 |
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(750 shares were Forfeited for non-payment of share first and final call of Rs 5 each) |
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Bank A/c |
Dr. |
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750 |
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Discount on issue of Shares A/c |
Dr. |
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750 |
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Shares Forfeiture A/c |
Dr. |
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6,000 |
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To Equity Share Capital A/c |
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7,500 |
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( Forfeited shares were re-issued at maximum permissible discount by law) |
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Computation Table |
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Categories |
Shares Applied
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Shares Allotted
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Money received on Application and Allotment @ Rs 4 each excluding discount of Re 1 per share |
Money transfers to Share Capital @ Rs 5 each |
Money transfers to Discount on issue @ Rs 1 each |
Excess Application and Allotment money |
Share First and Final Call due @ Rs 5 each |
Amount to be received on Share First and Final Call after adjustment |
Money refunded |
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I |
50,000 |
Nil |
2,00,000 |
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2,00,000 |
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II |
1,50,000 |
75,000 |
6,00,000 |
3,75,000 |
75,000 |
3,00,000 |
3,75,000 |
75,000 |
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2,00,000 |
75,000 |
8,00,000 |
3,75,000 |
75,000 |
3,00,000 |
3,75,000 |
75,000 |
2,00,000 |
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Information
|
Particulars |
Amount Rs |
|
Net Sales |
60,00,000 |
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Cost of goods sold |
45,00,000 |
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Other current assets |
11,00,000 |
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Current liabilities |
4,00,000 |
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Paid up share capital |
6,00,000 |
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6% Debentures |
3,00,000 |
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9% Loan |
1,00,000 |
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Debentures Redemption Reserve |
2,00,000 |
|
Closing Stock |
1,00,000 |
R.K. Ltd. invited applications for issuing 70,000 Equity Shares of Rs 10 each at a premium of Rs 35 per share. The amount was payable as follows:
On Application Rs 15 per share (including Rs 12 Premium)
On Allotment Rs 10 per share (including Rs 8 Premium)
On First and Final Call − Balance
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