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Question
Luxury Cars Ltd.' invited applications for issuing 10,000 equity shares of Rs 50 each at a premium of Rs 100 per share. The amount was payable as follows :
On application - Rs 75 per share (including Rs 50 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares were forfeited. The forfeited shares were later on re-issued for Rs 90 per share as fully paid up.
Pass necessary journal entries for the above transaction in the books of the company.
Solution
| In the books of Luxury Cars Ltd Journal Entry |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
Bank A/c Dr. To Equity Share Application A/c (Being amount received on an application for 10,000 shares |
7,80,000
|
7,80,000
|
||
|
Equity Share Application A/c Dr. To Equity Share Capital A/c To Securities Premium A/c To Calls-in-Advance A/c (Being amount of application transferred to Share Capital and securities premium) |
7,80,000
|
2,50,00 5,00,000 30,000
|
||
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being amount due on Allotment) |
7,50,000
|
2,50,000 5,00,000
|
||
|
Bank A/c (7,50,000 – 30,000 – 22,500) Dr. Calls – in – Advances A/c Dr. To Equity Share Allotment A/c (Being amount received on share Allotment) |
6,97,500 30,000
|
7,27,500
|
||
|
Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Equity Share Forfeiture A/c To Equity Share Allotment A/c (Being 300 shares forfeited) |
15,000 15,000
|
7,500 22,500
|
||
|
Bank A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being forfeited shares were reissued for 90 as fully paid up) |
27,000
|
15,000 12,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital |
7,500
|
7,500
|
||
Working Notes:
WN1: Calculation of Amount received on Application
Application amount received on 10,000 shares = 7,50,000
Shareholders of 400 shares paid in advance (400 x 75) = 30,000
Total amount = 7,80,000
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Long Answer Question
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| With Application | --- | ₹ 3 per share, |
| On allotment (including premium) | -- | ₹ 5 per share, |
| On First call | -- | ₹ 2 per share |
| On Second and Final call | -- | ₹ 2 per share. |
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Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows
| On application | ---- | ₹ 2 per share, |
| On allotment |
---- |
₹ 5 per share(including premium), |
| On first and final call |
---
|
Balance. |
Applications for 1,50,000 shares 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 had applied for 3,000 shares failed to pay the amount due on 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 reissued at ₹ 9 per share as fully paid-up .
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Share Forfeiture account is a ________.
Apaar Ltd forfeited 4,000 shares of ₹20 each, fully called up, on which only application money of ₹6 has been paid. Out of these 2,000 shares were reissued and ₹8,000 has been transferred to capital reserve. Calculate the rate at which these shares were reissued.
Vishnu Ltd. forfeited 20 shares of ₹10 each, ₹8 called up, on which John had paid application and allotment money of ₹5 per share, of these, 15 shares were reissued to Parker as fully paid up for ₹6 per share. What is the balance in the share Forfeiture Account after the relevant amount has been transferred to Capital Reserve Account?
Which of the following statement is false?
Radhe Ltd. forfeited 500 shares of ₹ 10 each fully called up for non-payment of final call of ₹ 3 per share. 300 of these shares were reissued at ₹ 8 per share as fully paid-up. The amount credited to Capital Reserve Account was:
200 equity shares of ₹10 each issued at par were forfeited for non-payment of first call of ₹3 per share. Final call of ₹2 per share was not yet called. By which amount the share capital will be debited on forfeiture?
Lilly Ltd. forfeited 100 shares of ₹ 10 each issued at 10% premium (₹ 8 called up ) on which a shareholder did not pay ₹ 3 of allotment (including premium) and first call of ₹ 2. Out of these 60 shares were reissued to Ram as fully paid for ₹ 8 per share and 20 shares to Suraj as fully paid up @ ₹ 12 per share at different intervals of time.
Prepare Share Forfeiture account.
Assertion: A company can reissue a forfeited share at an amount which is less than the amount not received on it.
Reason: A company can write off the net loss made on the reissue of a forfeited share from its capital reserve.
Which one of the following is correct?
