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Question
'Sulabh Ltd.' invited applications for issuing 1,50,000 equity shares of Rs 10 each at a premium of Rs 3 per share. The amount was payable as follow
On application - Rs 2 per share
On allotment - Rs 6 per share (including premium)
On first and final call - the balance
Applications for 2,00,000 shares were received and shares were allotted on pro-rata basis to all the applicants. Excess money received with applications was adjusted towards sums due on allotment. Suman who had applied for 2,000 shares failed to pay the allotment and call money. Raman failed to pay the first and final call on his 500 shares. Shares of both Suman and Raman were forfeited after the final call was made. The forfeited shares were re-issued for Rs 12 per share as fully paid up.
Pass necessary Journal Entries for the above transactions in the books of the company.
Solution
| Books of Sulabh Ltd Journal |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
Bank A/c Dr. To Equity Share Application A/c (Being application money received on 2,00,000 shares) |
4,00,000
|
4,00,000
|
||
|
Equity Share Application A/c Dr. To Equity Share Capital A/c To Equity Share Allotment A/c (Being amount of application transferred to share capital and excess money is adjusted towards allotment) |
4,00,000
|
3,00,000 1,00,000
|
||
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being amount due on allotment) |
9,00,000
|
4,50,000 4,50,000
|
||
|
Bank A/c Dr. To Equity Share Allotment A/c (Being amount received on share allotment) |
7,92,000
|
7,92,000
|
||
|
Equity Share First & Final Call Dr. To Equity Share Capital A/c (Being First and Final Call money due) |
7,50,000
|
7,50,000
|
||
|
Bank A/c Dr. To Equity Share First and Final Call A/c (Being money received on First and Final Call) |
7,40,000
|
7,40,000
|
||
|
Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Equity Share Forfeiture A/c (WN3) To Equity Share Allotment A/c To Equity Share First & Final Call A/c (Being shares of Suman and Raman forfeited) |
20,000 4,500
|
6,500 8,000 10,000
|
||
|
Bank A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being forfeited share were reissued for 12 as fully paid up) |
24,000
|
20,000 4,000
|
||
|
Equity Share Forfeiture A/c Dr. To Capital Reserve A/c (Being excess amount on forfeiture is transferred to capital reserve) |
6,500
|
6,500
|
||
Working Notes:
WN 1: Calculation of Amount not received on Allotment on First and Final Call
Shares allotted to Suman = `150000/200000 xx 2000` = 1500 shares
Amount received on 2,000 shares of 2 each = 4,000
Amount transferred to share Capital (1,500 x 2) = 3,000
Excess money received on application = 1,000
Amount due on Allotment @ 6 each = 9,000 (4,500 + 4,500)
Amount not received on Securities Premium = 4,500
Amount not received on allotment = 3,500 (4,500 – 1,000)
Amount not received on first and final call = 7,500 (1,500 x 5)
WN 2: Calculation of amount not received from Raman
Amount not received on first and final call = 2,500 (500 x 5)
WN 3 Calculation of amount credited in Share Forfeiture Account
Amount received from Suman = 4,000
Amount received from Raman (exluding premium amount) = 2,500 (500 x 5)
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|
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