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Question
Joy Ltd. invited applications for issuing 20,000 equity shares of Rs 10 each at par. The amount was payable as follows:
On Allotment − Rs 4 per share
On First and find call − Balance amount
The issue was oversubscribed by three times. Applications for 20% shares were rejected and the money was refunded. Allotment was made to the remaining applicants as ffollows:
| Category | No. of Shares Applied | No. of Shares Allotted |
| I | 30,000 | 15,000 |
| II | 18,000 | 5,000 |
Excess money received with applications was adjusted towards sums due on allotment. Money in excess to sums due on allotment was adjusted towards sums due on first and final call and any money in excess to sums due on first and final call was refunded. Kavi, a shareholder who had applied for 600 shares, failed to pay the remaining allotment money and his shares were immediately forfeited. Kavi belonged to Category I.
Afterwards the first and final call was made. Gupta, who had applied for 400 shares, failed to pay the first and final call. Gupta also belonged to Category I.
Shares of Gupta were also forfeited after the first and final call. The forfeited shares were reissued at Rs 12 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of Joy Ltd.
Solution
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
Bank A/c (60,000 × 3) |
Dr. |
|
1,80,000 |
|
|
|
To Share Application A/c |
|
|
|
1,80,000 |
|
|
(Received application money on 1,50,000 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Application A/c |
Dr. |
|
1,80,000 |
|
|
|
To Share Capital A/c |
|
|
|
60,000 |
|
|
To Share Allotment A/c |
|
|
|
65,000 |
| To Share First and Final Call A/c | 15,000 | ||||
|
|
To Bank A/c |
|
|
|
40,000 |
|
|
(Transfer of application money to Share Capital) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Allotment A/c (20,000 × 4) |
|
|
80,000 |
|
|
|
To Share Capital A/c |
|
|
|
80,000 |
|
|
(Allotment due on 20,000 shares ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
14,700 |
|
|
|
To Share Allotment A/c (WN 2) |
|
|
|
14,700 |
|
|
(Allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Capital A/c (300 × 7) |
Dr. |
|
2,100 | |
|
|
To Share Allotment A/c |
|
|
300 | |
|
|
To Share Forfeiture A/c |
|
|
1,800 | |
|
|
(300 shares forfeited for non-payment of allotment money) |
|
|
||
|
|
Share First and Final Call A/c |
Dr. |
|
59,100 | |
|
|
To Share Capital A/c |
|
|
59,100 | |
|
|
(Call money due on 19,700 shares) |
|
|
||
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
58,500 |
|
|
|
To Share First and Final Call A/c |
|
|
|
58,500 |
|
|
(Call money received) |
|
|
|
|
|
|
|
|
|
|
|
| Share Capital A/c | Dr. | 2,000 | |||
| To Share First and Final Call A/c | 600 | ||||
| To Share Forfeiture A/c | 1,400 | ||||
| (200 shares forfeited for non-payment of call money) | |||||
|
|
Bank A/c (500 × 12) |
Dr. |
|
6,000 |
|
|
|
To Share Capital A/c |
|
|
|
5,000 |
|
|
To Security Premium Reserve A/c |
|
|
|
1,000 |
|
|
(Reissue of 500 shares at Rs 12 per share) |
|
|
|
|
|
|
|
|
|
|
|
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|
Share Forfeiture A/c |
Dr. |
|
3,200 |
|
|
|
To Capital Reserve A/c |
|
|
|
3,200 |
|
|
(Profit on re-issue transferred to Capital Reserve Account) |
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Notes
Computation Table
|
Categories |
Shares Applied
|
Shares Allotted
|
Money received on Application @ Rs 3 each |
Money transferred to Share Capital @ Rs 3 each |
Excess Application money |
Amount adjusted on Allotment |
Amount adjusted on First Call |
Money refunded |
|
I |
30,000 |
15,000 |
90,000 |
45,000 |
45,000 |
45,000 |
- | - |
|
II |
18,000 |
5,000 |
54,000 |
15,000 |
39,000 |
20,000 |
15,000 |
4,000 |
|
III |
12,000 |
- |
36,000 |
- | - | - |
36,000 |
|
|
|
60,000 |
20,000 |
1,80,000 |
60,000 |
84,000 |
65,000 |
15,000 |
40,000 |
|
|
|
|
|
|
|
|
|
Calculation of Amount Received on Allotment
| Amount Due on Allotment | 80,000 |
| Less: Excess Received | 65,000 |
| Balance to be Received | 15,000 |
| Less: Amount not paid by Kavi | (300) |
| Amount received on Allotment | 14,700 |
Calculation of Shares Applied/Allotted
SharesAllottedtoKavi = `15000/30000xx6000=300`
| Amount not paid by Kavi on Allotment | |
| Amount received on Application | 1,800 |
| Less: Actual tfd to Sh. Capital | (900) |
| Excess received on Application | 900 |
| Amount due on allotment | 1,200 |
| Less: Excess adjustment | (900) |
| Amount unpaid by Kavi | 300 |
Share Allotted to Gupta=`15000/3000xx400=200`
| Amount not paid by Gupta on First & Final Call | |
| Amount received on Application | 1,200 |
| Less: Actual tfd to Sh. Capital | (600) |
| Excess received on Application | 600 |
| Amount due on allotment | 800 |
| Less: Excess adjustment | (600) |
| Amount to be received on Allotment | 200 |
The above table shows that excess money is fully exhausted on application and allotment, which means that call money is fully unpaid i.e. Rs 600 (200××3)
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