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Question
(Forfeiture of shares issued at par)
Vijay Ltd. issued Rs 40,000 Equity shares of Rs 10 each payable as follows.
| On Application : | Rs 2 | On Allotment : | Rs 3 |
| On First Call : | Rs 3 | On Second Call : | Rs.2 |
The company received applications for Rs 50,000 equity shares. Allotment for shares was made on pro rata basis. Share allotment and calls were made and as also received except Raja holding Rs 1,000 shares failed to pay both the calls. His shares were forfeited after second call.
Record the above transactions in books of Vijay Ltd.
Note: Excess money received on share application 10,000 × Rs 2 = 20,000 will be diverted to share allotment A/c.
Solution
| Shares Applied | Share Allotted |
| 50,000 | 40,000 |
Books of Vijay Ltd.
Journal Entry
| Date | Particulars | L.F. | Debit Amount (Rs.) | Credit Amount (Rs.) |
| Bank A/c Dr. To Equity Share Application A/c (Share application received on 50,000 shares of Rs 2 each) |
100,000 | 100,000 | ||
| Equity Share Application A/c Dr. To Equity Share Capital A/c To Equity Share Allotment A/c ( Share application transferred to Share Capital and Application money received in excess on 10,000 shares adjusted on Share Allotment) |
100,000 | 80,000 20,000 |
||
| Equity Share Allotment A/c Dr. To Equity Share Capital A/c (Share allotment due on 40,000 shares of Rs 3 each) |
120,000 | 120,000 | ||
|
Bank A/c Dr. |
100,000 | 100,000 | ||
| Equity Share First Call A/c Dr. To Equity Share Capital A/c (Share first call due on 40,000 shares of Rs 3 each) |
120,000 | 120,000 | ||
| Bank A/c Dr. To Equity Share First Call A/c (Share final call due on 40,000 shares of Rs. 2 each) |
117,000 | 117,000 | ||
| Equity Share Final Call A/c Dr. To Equity Share Capital A/c |
80,000 | 80,000 | ||
| Bank A/c Dr. To Equity Share Final Call A/c (Share final call received on 39,000 shares of Rs. 2 each) |
78,000 | 78,000 | ||
| Equity Share Capital A/c Dr. To Equity Share Forfeiture A/c To Equity Share First Call A/c To Equity Share Final Call A/c (1,000 shares were forfeited for non-payment of Share First Call of Rs 3 each and Share Final Call of Rs 2 each) |
10,000 | 5,000 3,000 2,000 |
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|
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