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Question
X Ltd. issued 40,000 Equity shares of Rs 10 each at a premium of Rs 2.50 per share.
The amount was payable as follows:
On Application- Rs 2 per share
On Allotment- Rs 4.50 per share (Including premium) and on call- 6 per share
Owing to heavy subscription the allotment was made on pro-rata basis as follows:
(a) Applicants for 20,000 shares were allotted 10,000 shares.
(b) Applicants for 56,000 shares were allotted 14,000 shares.
(c) Applicants for 48,000 shares were allotted 16,000 shares.
It was decided that excess amount received on applications would be utilized on allotment and the surplus would be refunded.
Ram to whom 1,000 shares were allotted, who belongs to category (a), failed to pay allotment money. His share were forfeited after the call.
Pass the necessary Journal entries in the books of X Ltd. for the above transaction.
Solution
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Analysis Table |
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Shares Applied (I) |
Shares Allotted (II) |
Application money received at Rs 2 per share (III) |
Application money transferred to share capital A/c (IV = III - IV) |
Excess Application Money (V) |
Share Allotment Due (VI) |
Amount Utilised on allotment (VII) |
Excess amount refunded (VI - VII) |
|
20,000 |
10,000 |
20,000 × Rs 2 = 40,000 |
10,000 × Rs 2 = 20,000 |
20,000 |
10,000 × Rs 4.50 = 45,000 |
20,000 |
- |
|
56,000 |
14,000 |
56,000 × Rs 2 = 1,12,000 |
14,000 × Rs 2 = 28,000 |
84,000 |
14,000 × Rs 4.50 = 63,000 |
63,000 |
21,000 |
|
48,000 |
16,000 |
48,000 × Rs 2 = 96,000 |
16,000 × Rs 2 = 32,000 |
64,000 |
16,000 × Rs 4.50 = 72,000 |
64,000 |
- |
|
1,24,000 shares |
40,000 shares |
Rs 2,48,000 |
Rs 80,000 |
Rs 1,68,000 |
Rs 1,80,000 |
Rs 1,47,000 |
Rs 21,000 |
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
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Bank A/c |
Dr. |
|
2,48,000 |
|
|
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To Equity Share Application A/c |
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2,48,000 |
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(Application money received at Rs 2 per share on 1,24,000 shares) |
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Equity Share Application A/c |
Dr. |
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2,48,000 |
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To Equity Share Capital A/c |
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80,000 |
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To Equity Share Allotment A/c |
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1,47,000 |
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To Bank A/c |
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21,000 |
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(Application money adjusted) |
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Equity Share Allotment A/c |
Dr. |
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1,80,000 |
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To Equity Share Capital A/c |
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80,000 |
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To Securities Premium A/c |
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1,00,000 |
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(Allotment money due) |
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Bank A/c |
Dr. |
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30,500 |
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To Equity Share Allotment A/c |
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30,500 |
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(Allotment money received (1,80,000 - 1,47,000 - 2,500)) |
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Equity Share First and Final Call A/c |
Dr. |
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2,40,000 |
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To Equity Share Capital A/c |
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2,40,000 |
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(First and final call money due) |
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Bank A/c |
Dr. |
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2,34,000 |
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To Equity Share First and Final Call A/c |
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2,34,000 |
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(First and final call money received except on 1,000 shares) |
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Equity Share Capital A/c (1,000 shares × Rs 10) |
Dr. |
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10,000 |
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Securities Premium A/c (1,000 shares × Rs 2.5) |
Dr. |
|
2,500 |
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To Share Forfeiture A/c (WN*) |
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4,000 |
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To Equity Share Allotment A/c (WN) |
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2,500 |
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To Equity Share First and Final Call A/c (1,000 shares × Rs 6) |
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6,000 |
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(1,000 shares forfeited due to non-payment of allotment and call) |
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Notes
Working Notes:
No. of shares allotted to Ram = 1,000 shares
∴ `"No of shares applied by Ram"=(1,000)/(10,000)xx20,000=2,000 Share `
|
Particulars |
Amount (Rs) |
|
Application money received from Ram (2,000 shares × Rs 2) |
4,000* |
|
Less: Amount utilised on application (1,000 shares × Rs 2) |
2,000 |
|
Excess Application Money |
2,000 |
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Amount due on allotment (1,000 shares × Rs 4.50) |
4,500 |
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Less: Excess application money adjusted |
(2,000) |
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Amount on allotment not received from Ram |
2,500 |
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