Question

Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of ₹ 10 each at a premium  of   ₹ 2 per share. The amount was payable as follows

On application	----	₹ 2 per share,
On allotment	----	₹ 5 per share(including premium),
On first and final call	---	Balance.

Applications for 1,50,000  shares were received . Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment . All calls were made. Manu who had applied for 3,000 shares failed to pay the amount  due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call . Shares of both Manu and Madhur  were forfeited . The forfeited shares were reissued at  ₹ 9 per share as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.

Answer 1

In the books of Jeevan Dhara Ltd.

Journal Entry

 

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		3,00,000
	To Equity Share Application A/c				3,00,000
	(Application money received on 1,50,000 shares)
	Equity Share Application A/c	Dr.		3,00,000
	To Equity Share Capital A/c				2,40,000
	To Equity Share Allotment A/c				60,000
	(Amount of application transferred to Share Capital and excess money is adjusted towards allotment)
	Equity Share Allotment A/c	Dr.		6,00,000
	To Equity Share Capital A/c				3,60,000
	To Securities Premium A/c				2,40,000
	(Amount due on allotment)
	Bank A/c	Dr.		5,29,200
	To Equity Share Allotment A/c				5,29,200
	(Amount received on share allotment)
	Equity Share First and Final Call A/c	Dr.		6,00,000
	To Equity Share Capital A/c				6,00,000
	(Amount due on first and final call)
	Bank A/c	Dr.		5,76,000
	To Equity Share First and Final Call A/c				5,76,000
	(Amount received on first and final call)
	Equity Share Capital A/c	Dr.		48,000
	Securities Premium A/c	Dr.		4,800
	To Equity Share Forfeiture A/c				18,000
	To Equity Share Allotment A/c				10,800
	To Equity Share First and Final Call A/c				24,000
	(Shares of Manu and Madhur were forfeited)
	Bank A/c	Dr.		43,200
	Equity Share Forfeiture A/c	Dr.		4,800
	To Equity Share Capital A/c				48,000
	(Forfeited shares were reissued for Rs 9 as fully paid-up)
	Equity Share Forfeiture A/c	Dr.		13,200
	To Capital Reserve A/c				13,200
	(Excess amount on forfeiture is transferred to capital reserve)

Working Notes: 

WN1: Calculation of Amount not received on Allotment and First and Final Call

Shares allotted to Manu = `120000/150000 xx 3000 = 2400 "shares"`

Amount received on 3000 shares of Rs 2 each = Rs 6000

Amount transferred to share Capital A/c (2400 × 2) = Rs 4800

Excess money received on application = Rs 1200

Amount due on Allottment @ Rs 5 each = Rs 12000 (7200 - 1200)

Amount not received on securities Premium = 4800

Amount not received on allotment = Rs 6000 (7200 - 1200)

Amount not received on first and final call = Rs 12000 (2400 × 5)

WN2: Calculation of amount not received from Madhur

Amount not received on first and final call = Rs 12000 (2400 × 5)