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Question
Roxy Ltd. issued Equity shares of 10 each payable as:
₹ 4 on Application and Allotment; ₹ 2 on First Call; ₹ 4 on Second and Final Call.
Following is an extract of the Journal of Roxy Ltd.
| Journal of Roxy Ltd. (an extract) | ||||
| Date | Particulars | L. F. | Dr. (₹) | Cr. (₹) |
| 1. | Share First Call A/c ...Dr. | 28,000 | ||
| To Share Capital A/c | 28,000 | |||
| (Being first call due on ___??___ shares @ ₹ 2 each) | ||||
| 2. | Bank A/c ...Dr. | ?? | ||
| Calls in arrears A/c ...Dr. | 2,000 | |||
| To Share First Call A/c | 28,000 | |||
| (Being first call received on ___??___ shares) | ||||
| 3. | Share Capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | 4,000 | |||
| To Calls in Arrears A/c | ?? | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non-payment of first call) | ||||
| 4. | Share Second & Final Call A/c ...Dr. | 52,000 | ||
| To Share capital A/c | 52,000 | |||
| (Being second & final call due on ___??___ shares @ ₹ 4 each) | ||||
| 5. | Bank A/c ...Dr. | ?? | ||
| Calls in Arrears A/c ...Dr. | 10,000 | |||
| To Share Second & Final Call A/c | 52,000 | |||
| (Being second call received on ___??___ shares) | ||||
| 6. | Share capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | ?? | |||
| To Calls in Arrears A/c | 10,000 | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non payment of final call) | ||||
| 7. | Bank A/c ...Dr. | ?? | ||
| Share Forfeited A/c ...Dr. | ?? | |||
| To Share Capital A/c | ?? | |||
| (Being 1,500 forfeited shares including those on which the first call was not received reissued @ ₹ 6 per shares fully called) | ||||
| 8. | Share Forfeiture A/c (1,000 × 0) + (500 × 2) ...Dr. | ?? | ||
| To Capital Reserve A/c | ?? | |||
| (Being ___??___) | ||||
You are required to complete the journal entries by filling up the missing information represented by '??', including the number of shares and narration, if any.
Solution
| Journal of Roxy Ltd. | ||||
| Date | Particulars | L. F. | Dr. (₹) | Cr. (₹) |
| 1. | Share First Call A/c (14,000 × 2) ...Dr. | 28,000 | ||
| To Share Capital A/c | 28,000 | |||
| (Being first call due on 14,000 shares @ ₹ 2 each) | ||||
| 2. | Bank A/c (13,000 × 2) ...Dr. | 26,000 | ||
| Calls in arrears A/c (1,000 × 2) ...Dr. | 2,000 | |||
| To Share First Call A/c | 28,000 | |||
| (Being first call received on 12,000 shares) | ||||
| 3. | Share Capital A/c (1,000 × 6) ...Dr. | 6,000 | ||
| To Shares Forfeited A/c (1,000 × 4) | 4,000 | |||
| To Calls in Arrears A/c | 2,000 | |||
| (Being 1000 shares of ₹ 10 each forfeited for non-payment of first call) | ||||
| 4. | Share Second & Final Call A/c (13,000 × 4) ...Dr. | 52,000 | ||
| To Share capital A/c | 52,000 | |||
| (Being second & final call due on 13,000 shares @ ₹ 4 each) | ||||
| 5. | Bank A/c (10,500 × 4) ...Dr. | 42,000 | ||
| Calls in Arrears A/c (2,500 × 4) ...Dr. | 10,000 | |||
| To Share Second & Final Call A/c | 52,000 | |||
| (Being second call received on 10,000 shares) | ||||
| 6. | Share capital A/c (2,500 × 10) ...Dr. | 25,000 | ||
| To Shares Forfeited A/c (2,500 × 6) | 15,000 | |||
| To Calls in Arrears A/c (2,500 × 4) | 10,000 | |||
| (Being 2,500 shares of ₹ 10 each forfeited for non payment of final call) | ||||
| 7. | Bank A/c (1,500 × 6) ...Dr. | 9,000 | ||
| Share Forfeited A/c (1,000 × 4) + (500 × 4) ...Dr. | 6,000 | |||
| To Share Capital A/c (1,500 × 10) | 15,000 | |||
| (Being 1,500 forfeited shares including those on which the first call was not received reissued @ ₹ 6 per shares fully called) | ||||
| 8. | Share Forfeiture A/c (1,000 × 0) + (500 × 2) ...Dr. | 1,000 | ||
| To Capital Reserve A/c | 1,000 | |||
| (Being excess amount of share forfeiture transferred to capital reserve) | ||||
Working Note:
1. Number of shares on which first call was due = `(28,000)/2` = 14,000 shares
2. First call was received on = `(26,000)/2` = 13,000 shares
3. Second and final call was due on = `(52,000)/4` = 13,000 shares
4. Second call received on = `(42,000)/4` = 10,500 shares
Calls in Arrear on = 13,000 − 10,500 = 2,500 shares
5. Number of shares forfeited on arrears on first call:
Shares Forfeited A/c = 24,000
Amount called up till first call = ₹ 6 per share
Amount received till first call = ₹ 4 per share
Shares forfeited = `(4,000)/4` = 1,000 shares
6. Number of shares forfeited of failure to pay final call
Calls in arrears = `(10,000)/4` = 2500 shares
7. Amount received on reissue of 1,500 shares = 1,500 × 6 = ₹ 9,000
Amount of reissue adjusted from shares forfeiture A/c = 15,000 − 9,000 = 6,000
8. Calculation of amount transferred to capital reserve:
Total profit on forfeiture of 1,500 shares = Profit on forfeited of
1,000 shares at first call time + Profit on forfeiture of 500 shares at
final call time
= 4,000 + `(15,000)/(2,500)` × 500 = 4,000 + 3,000 = 7,000
Amount adjusted on reissue of share = 6,000
Amount transferred to Capital Reserve = 7,000 − 6,000 = ₹ 1,000
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