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Question
Hero Ltd. was registered with a capital of ₹ 5,00,000 divided into 20,000 shares of ₹ 25 each, payable as:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 10 per share |
| On Call | The Balance |
The company offered to the public for subscription 10,000 shares. It received applications for 11,100 shares.
From amongst the applicants:
- Vimal, who had applied for 1,200 shares, paid ₹ 6,000 on application. but was allotted only 600 shares.
- Mohan applied for 1,000 shares, paid the full amount of ₹ 25,000 with his application but was allotted only 500 shares.
- Vineet, who had applied for 1,500 shares, paid his application and allotment money in order but did not pay the call money.
- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Mohan was used towards allotment and call and any surplus beyond the call was refunded. The company forfeited Vineet’s shares and later re-issued 500 of the forfeited shares @ ₹ 20 per share fully paid up.
You are required to pass journal entries in the books of Hero Ltd.
Solution
| In the Books of Hero Ltd. | ||||
| Journal Entries | ||||
| Sr. No. | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 1. | Bank A/c ...Dr. | 75,500 | ||
| To Share Application A/c | 75,500 | |||
| (Being share application received) | ||||
| 2. | Share Application A/c ...Dr. | 75,500 | ||
| To Share Capital A/c | 50,000 | |||
| To Share Allotment A/c | 8,000 | |||
| To Calls-in-Advance A/c | 5,000 | |||
| To Bank A/c | 12,500 | |||
| (Being share application transferred to share capital and subsequent instalments) | ||||
| 3. | Share Allotment A/c ...Dr. | 1,00,000 | ||
| To Share Capital A/c | 1,00,000 | |||
| (Being share allotment due) | ||||
| 4. | Bank A/c ...Dr. | 92,000 | ||
| To Share Allotment A/c | 92,000 | |||
| (Being share allotment received) | ||||
| 5. | Share 1st & Final Call A/c ...Dr. | 1,00,000 | ||
| To Share Capital A/c | 1,00,000 | |||
| (Being share capital due) | ||||
| 6. | Bank A/c ...Dr. | 80,000 | ||
| Calls-in-Advance A/c ...Dr. | 5,000 | |||
| Calls-in-Arrear A/c ...Dr. | 15,000 | |||
| To Share 1st & Final Call A/c | 1,00,000 | |||
| (Being share final call received) | ||||
| 7. | Share Capital A/c ...Dr. | 37,500 | ||
| To Share Forfeiture A/c | 22,500 | |||
| To Calls-in-Arrear A/c | 15,000 | |||
| (Being 1,500 shares forfeited) | ||||
| 8. | Bank A/c ...Dr. | 10,000 | ||
| Shares Forfeiture A/c ...Dr. | 2,500 | |||
| To Share Capital A/c | 12,500 | |||
| (Being 500 shares reissued) | ||||
| 9. | Share Forfeiture A/c ...Dr. | 5,000 | ||
| To Capital Reserve A/c | 5,000 | |||
| (Being net gain on reissued shares transferred to Capital Reserve) | ||||
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