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Question
Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payable as follows:
On application - Rs 2 per share
On allotment - Rs 5 per share (including premium)
On first and final call - balance
Applications for 1,50,000 share 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 has applied for 3,000 shares failed to pay the amount due on an 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 re-issued at Rs 9 per share as fully paid up. Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.
Solution
| Books of Jeevan Dhara Ltd. Journal |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
Bank A/c Dr. To Equity Share Application A/c (Being application money received on 1,50,000 shares) |
3,00,000
|
3,00,000
|
||
|
Equity Share Application A/c Dr. To Equity Share Capital A/c To Equity Share Allotment A/c (Being amount of application transferred to share capital and excess money is adjusted towards allotment) |
3,00,000
|
2,40,000 60,00
|
||
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being amount due on allotment) |
6,00,000
|
3,60,000 2,40,000
|
||
|
Bank A/c Dr. To Equity Share Allotment A/c (Being amount received on share allotment) |
5,29,200
|
5,29,200
|
||
|
Equity Share First & Final Call Dr. To Equity Share Capital A/c (Being First and Final Call money due) |
6,00,000
|
6,00,000
|
||
|
Bank A/c Dr. To Equity Share First and Final Call A/c (Being money received on First and Final Call) |
5,76,000
|
5,76,000
|
||
|
Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Equity Share Forfeiture A/c To Equity Share Allotment A/c To Equity Share First and Final Call A/c (Being shares of Manu and Madhur forfeited) |
48,000 4,800
|
18,000 10,800 24,000
|
||
|
Bank A/c Dr. Equity Share Forfeiture A/c Dr. To Equity Share Capital A/c (Being re-issue of forfeited share @ Rs 9 as fully paid up) |
43,200 4,800
|
48,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount of forfeiture transferred to capital |
13,200
|
13,200
|
||
Working Notes:
WN1: Calculation of Amount not received on Allotment on First and Final Call
Shares allotted to Manu = `120000/150,000 xx 3000` = 2,400 shares
Amount received on 3,000 shares of Rs 2 each = Rs 6,000
Amount transferred to share Capital (2,400 x 2) = Rs 4,800
Excess money received on application = Rs 1,200
Amount due on Allotment @ Rs 5 each = Rs 12,000 (7,200 + 4,800)
Amount not received on Securities Premium = Rs 4,800
Amount not received on allotment = Rs 6,000 (7,200 – 1,200)
Amount not received on first and final call = Rs 12,000 (2,400 x 5)
WN2: Calculation of amount not received from Madhur
Amount not received on first and final call = 12,000 (2,400 x 5)
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