Question

Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under :

With Application	Rs 3 per share
On allotment (including premium)	Rs 5 per share
On First call	Rs 2 per share
On Second and Final call	Rs 2 per share

Applications were received for 1,60,000 shares. Allotment was made on pro-rata basis. Excess money on application was adjusted against the amount due on allotment.

Rohan, 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 Rs 7 per share.

Record journal entries in the books of the company to record these transactions relating to share capital. Also show the company’s balance sheet.

 

Answer 1

Books of Himalaya Company Ltd.

Journal

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		4,80,000
	To Share Application A/c				4,80,000
	(Share Application money received for 1,60,000 shares @ Rs 3 per share)
	Share Application A/c	Dr.		4,80,000
	To Equity Share Capital A/c				3,60,000
	To Share Allotment A/c				1,20,000
	(Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)
	Share Allotment A/c	Dr.		6,00,000
	To Equity Share Capital A/c				3,60,000
	To Securities Premium				2,40,000
	(Share Allotment due on 1,20,000 shares @ Rs 5 per share including Rs 2 Securities Premium)
	Bank A/c	Dr.		4,80,000
	To Share Allotment A/c				4,80,000
	(Share allotment for 1,20,000 shares @ Rs 5 per share received)
	Share First Call A/c	Dr.		2,40,000
	To Equity Share Capital A/c				2,40,000
	(Share First Call due on 1,20,000 shares @ Rs 2 per share)
	Bank A/c	Dr.		2,30,400
	To Share First Call A/c				2,30,400
	(Share First Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)
	Share Final Call A/c	Dr.		2,40,000
	To Equity Share Capital A/c				2,40,000
	(Share Final call due on 1,20,000 shares @ Rs 2 per share)
	Bank A/c	Dr.		2,30,400
	To Share Final Call A/c				2,30,400
	(Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)
	Equity Share Capital A/c (4,800×10)	Dr.		48,000
	To  Share First Call A/c (4,800×2)				9,600
	To  Share Final Call A/c (4,800×2)				9,600
	To  Share Forfeiture A/c (4,800×6)				28,800
	(4,800 shares forfeited for the non-payment of First Call and Final Call)
	Bank A/c	Dr.		33,600
	Share Forfeiture A/c	Dr.		14,400
	To  Equity Share Capital				48,000
	(4,800 shares reissued @ Rs 7 per share, fully paid-up)
	Share Forfeiture A/c	Dr.		14,400
	To Capital Reserve A/c				14,400
	(Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)

Himalaya Company Limited

                                  Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	12,00,000
b. Reserves and Surplus	2	2,54,400
2. Non-Current Liabilities
3. Current Liabilities
Total		14,54,400
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	14,54,400
Total		14,54,400

Notes To Accounts 

Note No.	Particulars		Amount (Rs)
1	Share Capital
	Authorised Share Capital
	…….. shares of Rs 10 each		-
	Issued Share Capital
	1,20,000 shares of Rs 10 each		12,00,000
	Subscribed, Called-up and Paid-up Share Capital
	1,20,000 shares of Rs 10 each		12,00,000
2	Reserves and Surplus
	Securities Premium	2,40,000
	Capital Reserve	14,400	2,54,400
3	Cash and Cash Equivalents
	Cash at Bank		14,54,400