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Question
The Directors of Rockstar Ltd. invited applications for 2,00,000 Shares of ₹ 10 each, issued at 20% premium. Share was payable as ₹ 5 on application, ₹ 4 (including premium) on allotment and balance on call. Public had applied for 3,20,000 shares out of which applications for 20,000 shares were rejected and remaining were alloted on pro-rata basis.
Simba, an applicant of 15,000 shares failed to pay allotment and call money. His shares were forfeited and out of these 6,000 shares were reissued at a discount of ₹ 2 per share. Journalise.
Solution
| Journal Entries in the Books of Rockstar Ltd. | ||||
| Date | Particulars | L.F | Debit (₹) | Credit (₹) |
| i) | Bank A/c ...Dr. | 16,00,000 | ||
| To Share Application A/c | 16,00,000 | |||
| (Being Application money received) | ||||
| ii) | Share Application A/c ...Dr. | 16,00,000 | ||
| To Share Capital A/c | 10,00,000 | |||
| To Share Allotment A/c | 5,00,000 | |||
| To Bank A/c | 1,00,000 | |||
| (Being Application money utilised) | ||||
| iii) | Share Allotment A/c ...Dr. | 8,00,000 | ||
| To Share Capital A/c | 4,00,000 | |||
| To Securities Premium A/c | 4,00,000 | |||
| (Being allotment due with premium) | ||||
| iv) | Bank A/c ...Dr. | 2,85,000 | ||
| Calls in Arrears A/c ...Dr. | 15,000 | |||
| To Share Allotment A/c | 3,00,000 | |||
| (Being allotment received except of Simba) | ||||
| v) | Share First and Final Call A/c ...Dr. | 6,00,000 | ||
| To Share Capital A/c | 6,00,000 | |||
| (Being call money due) | ||||
| vi) | Bank A/c ...Dr. | 5,70,000 | ||
| Calls in Arrears A/c ...Dr. | 30,000 | |||
| To Share First and Final Call A/c | 6,00,000 | |||
| vii) | Share Capital A/c ...Dr. | 1,00,000 | ||
| Securities Premium A/c ...Dr. | 15,000 | |||
| To Share Forfeited A/c | 70,000 | |||
| To Calls in Arrears A/c | 45,000 | |||
| (Being Simba’s shares forfeited) | ||||
| viii) | Bank A/c ...Dr | 48,000 | ||
| Share Forfeited A/c ...Dr. | 12,000 | |||
| To Share Capital A/c | 60,000 | |||
| (Being forfeited shares re-issued) | ||||
| ix) | Share Forfeited A/c ...Dr. | 30,000 | ||
| To Capital Reserve A/c | 30,000 | |||
| (Being gain on re-issue transferred to Capital Reserve) | ||||
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