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Question
LCM Ltd. invited applications for issuing 2,00,000 equity shares of Rs 10 each at a premium of Rs 3 per share. The amount was payable as follows:
On application and allotment – Rs 8 per share (including premium)
On first and final call – the balance amount.
Applications for 3,00,000 share were received. Applications for 50,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. First and final call was made as was duly received except on 2,500 share applied by Kanwar. His shares were forfeited. The forfeited shares were re-issued at Rs 7 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of the company.
Solution
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Journal Entry |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Bank A/c |
Dr. |
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24,00,000 |
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To Equity Share Application and Allotment A/c |
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24,00,000 |
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(Share application and allotment received on 3,00,000 of Rs 8 each including premium of Rs 3 each) |
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Equity Share Application and Allotment A/c |
Dr. |
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24,00,000 |
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To Equity Share Capital A/c |
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10,00,000 |
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To Securities Premium A/c |
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6,00,000 |
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To Bank A/c |
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4,00,000 |
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To Equity Share First and Final Call A/c |
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4,00,000 |
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(Share application of 2,00,000 shares transferred to share capital , share application and allotment on 50,000 shares refunded and rest is adjusted on share first and final call) |
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Equity Share First and Final Call A/c |
Dr. |
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10,00,000 |
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To Equity Share Capital A/c |
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10,00,000 |
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(Share first and final call due on 2,00,000 shares of Rs 5 each) |
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Bank A/c |
Dr. |
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5,94,000 |
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Calls in arrears A/c |
Dr. |
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6,000 |
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To Equity Share First and Final Call A/c |
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6,00,000 |
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(Share first and final call received) |
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Equity Share Capital A/c |
Dr. |
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20,000 |
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To Share Forfeiture A/c |
Dr. |
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14,000 |
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To Calls in arrears A/c |
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6,000 |
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(2,000 shares were Forfeited for non-payment of share first and final call of Rs 5 each) |
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Bank A/c |
Dr. |
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14,000 |
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Share Forfeiture A/c |
Dr. |
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6,000 |
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To Equity Share Capital A/c |
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20,000 |
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(2,000 forfeited shares were re-issued at a discount of Rs 3 per share) |
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Share Forfeiture A/c |
Dr. |
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8,000 |
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To Capital Reserve |
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8,000 |
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(Share Forfeiture transferred to Capital Reserve) |
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Computation Table |
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Categories |
Shares Applied
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Shares Allotted
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Money received on Application and Allotment @ Rs 8 each including premium of Rs 3 each |
Money transfers to Share Capital @ Rs 5 each |
Money transfers to Securities Premium @ Rs 3 each |
Excess Application and Allotment money |
Share First and Final Call due @ Rs 5 each |
Amount to be received on Share First and Final Call after adjustment |
Money refunded |
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I |
50,000 |
Nil |
4,00,000 |
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4,00,000 |
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II |
2,50,000 |
2,00,000 |
20,00,000 |
10,00,000 |
6,00,000 |
4,00,000 |
10,00,000 |
6,00,000 |
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3,00,000 |
2,00,000 |
24,00,000 |
10,00,000 |
6,00,000 |
4,00,000 |
10,00,000 |
6,00,000 |
4,00,000 |
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