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Question
Vani Limited invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of 10%. The amounts were payable as under: On Application and Allotment - ₹ 4 per share (including premium ₹ 1)
On first call -₹ 4 per share
On second and final call - ₹ 3 per share
Applications for1,50,000 shares were received and pro-rata allotment was made to all the applicants. Excess application money was adjusted towards sums due on calls. Parth, a shareholder who had applied for 600 shares did not pay the first call. His shares were forfeited. The second and final call was not yet made. Half of the forfeited shares were reissued at ₹ 8 per share fully paid-up.
Journalise the above transactions in the books of Vani Limited by opening calls in arrears and calls in advance account wherever necessary.
Solution
| In the Books of Vani Limited Journal |
||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 1. | Bank A/c (1,50,000 x 4) ...Dr. | 6,00,000 | ||
| To Equity Share Application & Allotment A/c | 6,00,000 | |||
| (Being application and allotment money received for 1,50,000 shares) | ||||
| 2. | Equity Share Application & Allotment A/c ...Dr. | 6,00,000 | ||
| To Equity Share Capital A/c (1,00,000 x 3) | 3,00,000 | |||
| To Securities Premium Reserve A/c (1,00,000 × 1) | 1,00,000 | |||
| To Equity Share First Call A/c | 2,00,000 | |||
| (Being 1,00,000 equity shares allotted and excess amount credited to share first call account) | ||||
| 3. | Equity Share First Call A/c ...Dr. | 4,00,000 | ||
| To Equity Share Capital A/c | 4,00,000 | |||
| (Being first call money due on 1,00,000 shares) | ||||
| 4. | Bank A/c ...Dr. | 1,99,200 | ||
| Calls in Arrears A/c ...Dr. | 800 | |||
| To Equity Share First Call A/c | 2,00,000 | |||
| (Being first call money received on 99,600 shares) | ||||
| 5. | Equity Share Capital A/c (400 × ₹7) ...Dr. | 2,800 | ||
| To Calls in Arrears A/c | 800 | |||
| To Share Forfeiture A/c | 2,000 | |||
| (Being 400 shares of Parth forfeited for non-payment of first call money) | ||||
| 6. | Bank A/c (200 × ₹ 8) ...Dr. | 1,600 | ||
| Share Forfeiture A/c (200 × ₹ 2) ...Dr. | 400 | |||
| To Equity Share Capital A/c (200 × ₹10) | 2,000 | |||
| (Being reissue of 200 shares @ ₹8 per share fully paid-up) | ||||
| 7. | Share Forfeiture A/c ...Dr. | 600 | ||
| To Capital Reserve A/c | 600 | |||
| (Being profit on reissue of 200 forfeited shares transferred to Capital Reserve Account) | ||||
Working Note:
(i) Calculation of Excess Amount Received from Parth on Application & Allotment:
Shares Applied by Parth = 600 shares
Shares Allotted to Parth = `(1,00,000)/(1,50,000)xx600= 400`shares
Excess Application & Allotment Money Received from Parth
= (600 shares - 400 shares) × ₹4
200 shares × ₹4
= ₹800
(ii)
| Calculation of Amount Not Received from Parth in First Call: | |
| Amount due on First Call (400 shares × ₹4) | ₹1,600 |
| Less: Excess Money Received from Parth on Application & Allotment | ₹ 800 |
| First call money not received from Parth | ₹ 800 |
(iii)
| Calculation of Amount Received on First Call: | |
| Total Amount Due to First Call (1,00,000 shares x ₹ 4) | ₹ 4,00,000 |
| Less: Excess Amount Received on Application & Allotment | ₹ 2,00,000 |
| Balance Due | ₹ 2,00,000 |
| Less: First Call Money not received from Parth | ₹ 800 |
| Amount Received on First Call | ₹ 1,99,200 |
(iv) Calculation of Amount to be transferred to Capital Reserve:
Profit on 400 shares = ₹ 2,000
Profit on 200 shares = `₹ 2,000 xx (200)/400 `
= ₹ 1,000
Loss on Reissue of 200 shares = 200 × ₹ 2 = ₹ 400
Profit on Reissue transferred to Capital Reserve = ₹ 1,000 - ₹ 400
= ₹ 600
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