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Question
Kasthuri Ltd. had allotted 20,000 equity shares of ₹ 10 each at a premium of ₹ 2 each to applicants of 30,000 shares on a pro rata basis. The amount payable was ₹ 3 on application, ₹ 5 on allotment (including premium of ₹ 2 each) and ₹ 2 on first call and ₹ 2 on final call. Subin, a shareholder, failed to pay the first call and final call on his 500 shares. All the shares were forfeited and out of them, 400 shares were reissued @ ₹ 8 per share. Pass necessary journal entries.
Solution
| Rs. | |
| Application money received (30,000 × Rs. 3) | 90,000 |
| Less: amount due on application | 20,000 |
| Excess adjusted towards allotment | 70,000 |
| Particulars | L.F. | Debit Rs. | Credit Rs. | |
| (1) | Bank A/c (30,000 × Rs. 3) ....Dr. To Share Application A/c [Share application money received] |
90,000 | 90,000 | |
| (2) | Share application A/c ...Dr. To Share capital A/c To share allotment A/c [Application money transferred excess adjusted towards allotment] |
30,000 | 20,000 10,000 |
|
| (3) | Share Allotment A/c (20,000 × Rs. 5) ....Dr. To Securities Premium A/c (20,000 × Rs. 2) To share capital A/c (20,000 x Rs. 3) [Allotment money due, including premium] |
1,00,000 | 40,000 60,000 |
|
| (4) | Bank A/c ...Dr. To Share allotment A/c [Balance allotment money received] |
90,000 | 90,000 | |
| (5) | Share I call A/c (20,000 × Rs. 2) ...Dr. To Share capital A/c [Share I call money due] |
40,000 | 40,000 | |
| (6) | Bank A/c (19,500 × Rs. 2) ...Dr. To share I call A/c [I call money received with the exception on 500 share] |
39,000 | 39,000 | |
| (7) | share II & final A/c (20,000 × Rs. 2) Dr. To Share capital A/c [II & final call money due] |
40,000 | 40,000 | |
| (8) | Bank A/c (19,500 × Rs. 2) ...Dr. To share II & final call A/c [Share final call money received with the exception on 500 shares] |
39,000 | 39,000 | |
| (9) | Share capital A/c (500 × Rs. 10) ...Dr. To shares I call (500 × Rs. 2) To share II & final call A/c (500 × Rs. 2) To Forfeited shares A/c (500 × Rs. 6) [Forfeiture of shares made] |
5,000 | 1,000 1,000 3,000 |
|
| (10) | Bank A/c (400 × Rs. 8) ...Dr. Forfeited shares A/c (400 × Rs. 2) ...Dr. To share capital A/c [Reissue of forfeited shares] |
3,200 800 |
4,000 | |
| (11) | Forfeited shares A/c ....Dr. To Capital Reserve A/c [Profit on reissue tranferred to capital reserve A/c] |
1,600 | 1,600 |
| Rs. | |
| Profit on forfeited | 6 |
| Less on reissue | 2 |
| Profit on reissue | 4 × No. of. shares reissued |
| (4 × 400) | = Rs. 1,600 |
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