Question

Lazal Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each, at 20% premium. Amount per share was payable as follows: ₹ 5 on application; ₹ 4 (including premium) on allotment; and balance on first and final call. Public applied for 3,20,000 shares, out of which applications for 20,000 shares were rejected and shares were allotted on pro-rata basis to the remaining applications. Kavita, an applicant of 15,000 shares failed to pay allotment and call money. Her shares were forfeited.

Pass necessary Journal entries for the above transactions in the books of the company.

Answer 1

In the books of Lazal Ltd. Journal Entries
Date	Particulars	L.F.	Dr. ₹	Cr. ₹
1.	Bank A/c   ...Dr.		16,00,000	-
	To Share Application A/c		-	16,00,000
	(Application money received on 3,20,000 shares)
2.	Share Application A/c   ...Dr.		16,00,000	-
	To Share Capital A/c		-	10,00,000
	To Share Allotment A/c		-	5,00,000
	To Bank A/c		-	1,00,000
	(Amount transferred to share capital and excess adjusted)
3.	Share Allotment A/c   ...Dr.		8,00,000	-
	To Share Capital A/c		-	4,00,000
	To Securities Premium A/c		-	4,00,000
	(Allotment due)
4.	Bank A/c   ...Dr.		2,85,000	-
	Calls-in-arrears A/c   ...Dr.		15,000	-
	To Share Allotment A/c		-	3,00,000
	(Allotment money received)
5.	Share First & Final Call A/c   ...Dr.		6,00,000	-
	To Share Capital A/c		-	6,00,000
	(Call money due)
6.	Bank A/c   ...Dr.		5,70,000	-
	Call in Arrear A/c   ...Dr.		30,000	-
	To Share First & Final Call A/c		-	6,00,000
	(Call money received)
7.	Share Capital A/c   ...Dr.		1,00,000	-
	To Share Forfeiture A/c		-	55,000
	To Calls-in-arrears A/c		-	45,000
	(Being shares forfeited)

Working note:

Amount received on allotment 

= 8,00,000 − 5,00,000 − 15,000

= 2,85,000

Amount due = 8,00,000

Adjusted due to pro rata = 5,00,000

Amount failed:

Kavita Applied = 15,000 shares

Allotted = 15,000 × `2/3` = 10,000 shares

Amount due from Kavita = 10,000 × 4 = ₹ 40,000

Excess received on application = 5,000 shares × 5 = ₹ 25,000

Net amount failed = 40,000 − 25,000 = ₹ 15,000