12th | Ts grewal 2021-2022 | Question 81 to 85 | Ch: 1 Company Account: Accounting for share capital

Page No 9.125:

Question 81:

JJK Ltd. invited applications for issuing 50,000 equity shares of  ` 10 each at par. The amount was payable as follows:

On Application	—	` 2 per share,
On Allotment	—	` 4 per share; and
On First and Final call	—	Balance Amount.

The issue was oversubscribed three times. Applications for 30%  shares were rejected and money refunded .Allotment was made to the remaining applicants as follows:

Category	No . of Shares Applied	No. of Shares Allotted
I	80,000	40,000
II	25,000	10,000

Excess money  paid by the applicants who were allotted shares was adjusted towards sums due on allotment .
Deepak, a shareholder belonging  to Category I , who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment . Afterwards, first and final call was made and was duly received . The forfeited shares of Deepak and Raju were reissued at  `11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of company.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bank A/c (1,50,000 × 2)	Dr.		3,00,000
	To Share Application A/c				3,00,000
	(Application money received on 1,50,000 shares)
	Share Application A/c	Dr.		3,00,000
	To Share Capital A/c				1,00,000
	To Share Allotment A/c				1,10,000
	To Bank A/c				90,000
	(Application money transferred to Share Capital)
	Share Allotment A/c (50,000 × 4)			2,00,000
	To Share Capital A/c				2,00,000
	(Allotment money due on 50,000 shares)
	Bank A/c	Dr.		88,900
	To Share Allotment A/c (WN2)				88,900
	(Allotment money received)
	Share Capital A/c (600 × 6)	Dr.		3,600
	To Share Allotment A/c (1,000 + 100)				1,100
	To Share Forfeiture A/c (2,000 + 500)				2,500
	(600 shares forfeited for non–payment of allotment money)
	Share First and Final Call A/c	Dr.		1,97,600
	To Share Capital A/c				1,97,600
	(Call money due on 49,400 shares)
	Bank A/c	Dr.		1,97,600
	To Share First and Final Call A/c				1,97,600
	(Call money received)
	Bank A/c (600 × 11)	Dr.		6,600
	To Share Capital A/c				6,000
	To Security Premium Reserve A/c				600
	(600 shares re–issued at  ` 11 per share)
	Share Forfeiture A/c	Dr.		2,500
	To Capital Reserve A/c				2,500
	(Profit on re–issue transferred to Capital Reserve)

Working Notes:

WN1:Computation Table
 

Categories	Shares Applied	Shares Allotted	Money received on Application  @  ` 2 each	Money transferred to Share Capital @  ` 2 each	Excess Application Money	Amount adjusted on Allotment	Money refunded
I	80,000	40,000	1,60,000	80,000	80,000	80,000	–
II	25,000	10,000	50,000	20,000	30,000	30,000	–
III	45,000	–	90,000	–	–	–	90,000
	1,50,000	50,000	3,00,000	1,00,000	1,10,000	1,10,000	90,000

WN2:Calculation of Amount Received on Allotment
 

Amount Due on Allotment	2,00,000
Less: Excess Received	1,10,000
Balance to be Received	90,000
Less: Amount not paid by Deepak	(1,000)
Less: Amount not paid by Raju	(100)
Amount received on Allotment	88,900

WN3: Calculation of Shares Applied/Allotted

Shares Allotted to Deepak=40,000/80,000×1,000=500

Shares Applied by Raju=25,000/10,000×100=250
 

Amount not paid by Deepak on Allotment
Amount received on Application	2,000
Less: Transferred to Share Capital	(1,000)
Excess received on Application	1,000
Amount due on allotment	2,000
Less: Excess adjustment	(1,000)
Amount unpaid by Deepak	1,000

 

Amount not paid by Raju on Allotment
Amount received on Application	500
Less:  Transferred to Share Capital	(200)
Excess received on Application	300
Amount due on allotment	400
Less: Excess adjustment	(300)
Amount unpaid by Raju	100

 

Page No 9.125:

Question 82:

XYZ Ltd . is registered with an authorised capital of  ` 2,00,000 divided into 2,000 shares of  ` 100 each of which , 1,000 shares were offered for public subscription at a premium of  ` 5 per share , payable as:

On application	—	` 10 per share,
On allotment	—	`25 per share  (including premium),
On first call	—	` 40 per share
On final call	—	` 30 per share

Applications were received for 1,800 shares, of which applications for 300 shares were rejected outright; the rest of the application were allotted 1,000 shares on pro rata basis. Excess application money was transferred to allotment.
All the money was duly received except from Sundar , holder of 100 shares, who failed  to pay allotment and first call money. His shares were later forfeited and reissued to Shyam at  ` 60 per share  ` 70 paid-up. Final call has not been made.
Pass necessary Journal entries and prepare Cash Book in the books of XYZ Limited.

 

Answer:

 

Authorised capital 2,000 shares of  ` 100 each.

Issued 1,000 shares of  ` 100 each at premium of  ` 5

Applied 1,800 shares

Allotment made as:				Amount payable per shares as:
Applied		Allotted		Application	` 10
1,500		1,000		Allotment	` 25	(20 + 5)
300		NIL		First Call	` 40
					` 75	Called-up
				Final Call	` 30
1,800		1,000			` 105

 

Books of XYZ Limited Journal
Date	Particulars		L.F.	Debit Amount  `	Credit Amount  `
	Share Application A/c	Dr.		15,000
	To Share Capital A/c				10,000
	To Share Allotment A/c				5,000
	(Share application of 1,000 shares transferred to Share Capital,  ` 5,000 adjusted on allotment)
	Share Allotment A/c	Dr.		25,000
	To Share Capital A/c				20,000
	To Securities Premium A/c				5,000
	(Share allotment due on 1,000 shares at  ` 25 each including  ` 5 premium)
	Share First Call A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(First call due on 1,000 shares at  ` 40 each)
	Securities Premium A/c	Dr.		500
	Share Capital A/c	Dr.		7,000
	To Share Forfeiture A/c				1,500
	To Share Allotment A/c				2,000
	To Share First Call A/c				4,000
	(100 shares of  ` 100 each  ` 70 called–up, forfeited for the non-payment of allotment and first call)
	Share Forfeiture A/c	Dr.		1,000
	To Share Capital A/c				1,000
	(100 shares of  ` 100 each re-issued at  ` 60 per share,  ` 70 paid-up)
	Share Forfeiture A/c	Dr.		500
	To Capital Reserve A/c				500
	(Balance in Share Forfeiture after re-issue transferred to Capital Reserve)

 

Cash Book
Dr.							Cr.
Date		Particulars	Bank  `	Date	Particulars	Bank  `
		Share Application	18,000		Share Application	3,000
		Share Allotment	18,000
		Share First Call	36,000
		Share Capital	6,000		Balance c/d	75,000
			78,000			78,000

 

Working Notes:

Number of share applied by Sunder	=	1,500×100/1,000
	=	150 shares

Sunder 

Money received on application 150 ×  ` 10	=	1,500
Money transferred to Share Capital 100 ×  ` 10	=	1,000
Excess Money on application		500

 

Share allotment due 100 ×  ` 25	=	2,500
Less: Excess money on application	=	500
Calls-in-Arrears on Allotment		2,000

Allotment

Allotment due on all shares 1,000 ×  ` 25	=	25,000
Less: Adjustment of excess money on application	=	5,000
		20,000
Less: Calls-in-Arrears by Sunder	=	2,000
Money received on allotment	=	18,000

Capital Reserve

Share Forfeiture	Cr.	1,500
Less: Share Forfeiture	Dr.	1,000
Balance in Share Forfeiture after reissue		500

Capital Reserve = Balance in Share Forfeiture after re-issue

=  ` 500

 

Page No 9.125:

Question 83:

A Ltd. invited applications for issuing 1,00,000 shares of  ` 10 each at a premium of  ` 1 per share. The amount was payable as follows:

On Application	–	3 per share;
On Allotment	–	3 per share (including premium);
On First Call	–	3 per share;
On Second and Final Call	–	Balance amount.

Applications for 1,60,000 shares were received. Allotment was made on the following basis:
 

(i)	To applicants for 90,000 shares	–	40,000 shares;
(ii)	To applicants for 50,000 shares	–	40,000 shares;
(iii)	To applicants for 20,000 shares	–	Full shares.

Excess money paid on application is to be adjusted against the amount due on allotment and calls.

Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money.

Another shareholder, Sudha, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money.

All the shares of Rishabh and Sudha were forfeited and were subsequently reissued at  ` 7 per share fully paid.

Pass the necessary Journal entries in the books of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required.

Answer:

In the books of A Ltd. Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bank A/c (1,60,000 × 3)	Dr.		4,80,000
	To Share Application A/c				4,80,000
	(Being application money received on 1,60,000 shares)
	Share Application A/c	Dr.		4,80,000
	To Share Capital A/c (1,00,000 × 3)				3,00,000
	To Call-in Advance A/c (4,80,000 – 3,00,000)				1,80,000
	(Being application money adjusted on 1,00,000 shares and Excess treated as an advance)
	Share Allotment A/c (1,00,000 × 3)	Dr.		3,00,000
	To Share Capital A/c (1,00,000 × 2)				2,00,000
	To Securities Premium Reserve A/c (1,00,000 × 1)				1,00,000
	(Being allotment money due)
	Bank A/c	Dr.		1,47,300
	Calls-in-Advance A/c (1,20,000 + 30,000)	Dr.		1,50,000
	Calls-in-Arrear A/c (1,200 × 3) – 900]	Dr.		2,700
	To Share Allotment A/c				3,00,000
	(Being allotment money received after adjusting the excess application money and non-payment on 1,200 shares)
	Share First Call A/c (1,00,000×3)	Dr.		3,00,000
	To Share Capital A/c				3,00,000
	(Being first call money due)
	Bank A/c	Dr.		2,64,600
	Calls-in-Advance A/c (1,80,000 – 1,50,000)	Dr.		30,000
	Calls-in-Arrears A/c [3,600 + (2,400 – 600)]			5,400
	To Share First Call A/c				3,00,000
	(Being amount received on first call except on 2,000 shares)
	Share Second and Final Call A/c (1,00,000 × 2)	Dr.		2,00,000
	To Share Capital A/c				2,00,000
	(Being share second and final call money due)
	Bank A/c	Dr.		1,96,000
	Call-in-Arrears A/c (2,000 × 2)	Dr.		4,000
	To Share Second and Final Call A/c				2,00,000
	(Being amount received on second and final call except on 2,000 shares)
	Share Capital A/c (2,000 × 10)	Dr.		20,000
	Securities Premium Reserve A/c (1,200 × 1)	Dr.		1,200
	To Share Forfeiture A/c [(3,600 + 900) + (800 × 5 + 600)]				9,100
	To Calls-in-Arrears A/c (2,700 + 5,400 + 4,000)				12,100
	(Being 2,000 shares forfeited for non-payment of amount due)
	Bank A/c (2,000 × 7)	Dr.		14,000
	Share Forfeiture A/c	Dr.		6,000
	To Share Capital A/c				20,000
	(Being 2000 shares reissued at  ` 7 per share fully paid-up)
	Share Forfeiture A/c	Dr.		3,100
	To Capital Reserve A/c (9,100 – 6,000)				3,100
	(Being capital gain on reissued shares transferred)

  Working Notes:  

Computation Table
Categories	Shares Applied	Shares Allotted	Money received on Application @  ` 3	Money Transferred to Share Capital @  ` 3	Allotment due @  ` 3(including premium of  ` 1)	Excess on Application	Refund
I	90,000	40,000	2,70,000	1,20,000	1,20,000	1,50,000	Nil
II	50,000	40,000	1,50,000	1,20,000	1,20,000	30,000	Nil
III	20,000	20,000	60,000	60,000	60,000	–	Nil

 

Particulars	Shares Allotted	Shares Applied	Excess on Application ( `)	Money adjusted in calls ( `)
Rishabh- Category (ii)	(1,500×40,000/50,000) =1,200	1,500	900	–
Sudha- Category (i)	(1,800×40,000/90,000) = 800	1,800	3,000	600

 

Page No 9.126:

Question 84:

Ruchi Ltd. issued for public subscription 40,000 Equity Shares of  ` 10 each at a premium of   ` 2 per share payable as:

On application		—		` 2 per share;
On allotment			—	` 5 per share (including premium),
On first call	—			` 2 per share,
On second and     final call	—			` 3 per share.

Applications were received for 60,000 shares. Allotment was made on pro rata basis to the applicants for 48,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards sums due on allotment. Ram to whom 1,600 shares were allotted failed to pay the allotment money and Shyam to whom 2,000 shares were allotted failed to pay the two calls. These shares were subsequently forfeited after the second and final call was made. All the forfeited shares were reissued as fully paid-up @  ` 8 per share.
Give necessary Journal entries for the above transactions.

Answer:

Issued capital 40,000 shares of  ` 10 each at premium of  ` 2

Applied  ` 60,000 shares

Allotment made as:				Payable as:
Applied		Allotted		Application	` 2
48,000		40,000		Allotment	` 5	(3+2)
12,000		NIL		First Call	` 2
60,000		40,000		Second and Final Call	` 3
					`12	(10+2) per share

 

Books of Ruchi Limited Journal Entries
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bank A/c	Dr.		1,20,000
	To Equity Share Application A/c				1,20,000
	(Application money received for 60,000 shares at  ` 2 each)
	Equity Share Application A/c	Dr.		1,20,000
	To Equity Share Capital A/c				80,000
	To Equity Share Allotment A/c				16,000
	To Bank A/c				24,000
	(Share application of 40,000 shares transferred to share capital,  ` 16,000 adjusted on allotment and remaining  ` 24,000 refunded)
	Equity Share Allotment A/c	Dr.		2,00,000
	To Equity Share Capital A/c				1,20,000
	To Securities Premium A/c				80,000
	(Share allotment due on 40,000 shares at  ` 5 each including  ` 2 premium)
	Bank A/c	Dr.		1,76,640
	To Equity Share Allotment A/c				1,76,640
	(Share allotment received on all shares except on 1,600 Shares held by Ram)
	Equity Share First Call A/c	Dr.		80,000
	To Equity Share Capital A/c				80,000
	(First call due on 40,000 shares at  ` 2 each)
	Bank A/c	Dr.		72,800
	To Equity Share First Call A/c				72,800
	(First call received on 36,400 shares and holders of 3,600 failed to pay it)
	Equity Share Second and Final Call A/c	Dr.		1,20,000
	To Equity Share Capital A/c				1,20,000
	(Second and final call due on 40,000 shares at  ` 3 each)
	Bank A/c	Dr.		1,09,200
	To Equity Share second and Final Call A/c				1,09,200
	(Second and final call received on 36,400 shares and holders of 3,600 shares failed to pay it)
	Equity Share Capital A/c	Dr.		16,000
	Securities Premium A/c	Dr.		3,200
	To Share Forfeiture A/c				3,840
	To Equity Share Allotment A/c				7,360
	To Equity Share first Call A/c				3,200
	To Equity Share Second and Final Call A/c				4,800
	(1600 shares held by Ram forfeited for non-payment amount due including premium)
	Equity Share Capital A/c	Dr.		20,000
	To Equity Share Forfeiture A/c				10,000
	To Equity Share First Call A/c				4,000
	To Equity Share Second and Final Call A/c				6,000
	(2,000 shares held by Shyam forfeited for non-payment of amount due)
	Bank A/c	Dr.		28,800
	Share Forfeiture A/c	Dr.		7,200
	To Equity Share Capital A/c				36,000
	(3,600 shares of  ` 10 each re-issued at  ` 8 per share fully paid-up)
	Share Forfeiture A/c	Dr.		6,640
	To Capital Reserve A/c				6,640
	(Balance in Share Forfeiture transferred to Capital Reserve)

 

Working Notes:

 

Ram’s shares

Number of shares applied by Ram =48,000/40,000×1,600=1,920 Shares

Money received on Application (1,920 shares ×  ` 2)	=	` 3,840
Less: Application money transferred to Share Capital (1,600 shares ×  ` 2)	=	` 3,200
Excess money on Application	=	` 640

 

Share Allotment due (1,600 shares ×  ` 5)	`	8,000
Less: Excess money on Application	`	640
Calls-in-Arrears on Allotment	`	7,360

Share Allotment

Share Allotment due (40,000 shares ×  ` 5)	2,00,000
Less: Excess money on Application	16,000
	1,84,000
Less: Calls-in-Arrears by Ram	7,360
Money received on Allotment	1,76,640

Share First Call

Share First Call due (40,000 shares ×  ` 2)	80,000
Less: Calls-in-Arrears by Ram and Shyam (3,600 shares × ` 2)	7,200
Money received on First Call	72,800

Share Final Call

Share Final Call due 40,000 Shares ×  ` 3	1,20,000
Less: Calls-in-Arrears by Ram and Shyam (3,600 shares ×  ` 3)	10,800
Money received on Second and Final Call	1,09,200

Capital Reserve

Share Forfeiture on Ram’s shares (money received on application)	3,840
Share Forfeiture on Shyam’s shares (2,000 shares ×  ` 5)	10,000
	13,840	Cr.
Less: Share Forfeiture	7,200	Dr.
Capital Reserve	6,640

Page No 9.126:

Question 85:

Competent Ltd. issued a prospectus inviting applications for 50,000 Equity Shares of  ` 10 each, payable  ` 5 as per application (including  ` 2 as premium),  ` 4 as per allotment and the balance towards first and final call.

Applications were received for 65,000 shares. Application money received on 5,000 shares was refunded with letter of regret and allotments were made on pro rata basis to the applicants of 60,000 shares. Money overpaid on applications including premium was adjusted on account of sums due on allotment.

Mr. Sharma to whom 700 shares were allotted failed to pay  the allotment money and his shares were forfeited by the Directors on his subsequently failure to pay the call money.

All the forfeited shares were subsequently sold to Mr. Jain credited as fully paid-up for  ` 9 per share.

You are required to set out the Journal entries and the relevant entries in the Cash Book.

Answer:

Issued shares 50,000 of  ` 10 each at a premium of  ` 2

Applied share 65,000

Allotment made as				Payable as:
Applied		Allotted		Application	` 5	(3 + 2)
60,000		50,000		Allotment	` 4
5,000		NIL		First and Final Call	` 3
65,000		50,000			` 12	(10 + 2) per share

 

Books of Competent Ltd.
Dr.	Cash Book						Cr.
Date	Particulars	L.F.	Bank  `	Date	Particulars	L.F.	Bank  `
	Equity Share Application		3,25,000		Equity Share Application		25,000
	Equity Share Allotment		1,47,900
	Equity Share First and Final Call		1,47,900		Balance c/d		6,02,100
	Equity Share Capital		6,300
			6,27,100				6,27,100

 

 

Books of X Limited Journal
Date	Particulars		L.F.	Debit Amount  `	Credit Amount  `
	Equity Share Application A/c	Dr.		3,00,000
	To Equity Share Capital A/c				1,50,000
	To Securities Premium				1,00,000
	To Equity Share Allotment A/c				50,000
	(Share application money of 50,000 shares transferred to share capital at  ` 3 each and to premium  ` 2 each and  ` 50,000 adjusted on allotment)
	Equity Share Allotment A/c	Dr.		2,00,000
	To Equity Share Capital A/c				2,00,000
	(Allotment due on 50,000 shares at  ` 4 each)
	Equity Share First and Final Call A/c	Dr.		1,50,000
	To Equity Share Capital A/c				1,50,000
	(First and final call due on 50,000 shares at  ` 3 each)
	Equity Share Capital A/c	Dr.		7,000
	To Share Forfeiture A/c				2,800
	To Equity Share Allotment A/c				2,100
	To Equity Share First and Final A/c				2,100
	(700 shares of  ` 10 each forfeited for the non-payment of amount due)
	Share Forfeiture A/c	Dr.		700
	To Equity Share Capital A/c				700
	(Loss on issue Re 1 on 700 shares charged from the Share Forfeiture Account)
	Share Forfeiture A/c	Dr.		2,100
	To Capital Reserve A/c				2,100
	(Balance in Share Forfeiture after re-issue transferred to Capital Reserve)

 

Working Notes-

Mr. Sharma’s Share

Number of shares applied by Mr Sharma = 60,000/50,000×700=840 shares

Money received on Application 840 shares ×  ` 5	=	4,200
Less: Money transferred to Share Capital 700 shares ×  ` 3	=	2,100
Less: Securities Premium 700 shares ×  ` 2	=	1,400
Excess money on Application		700

 

Allotment due 700 shares ×  ` 4	=	2,800
Less: Excess money on Application		700
Calls-in Arrears on Allotment		2,100

Share Allotment

Share Allotment due 50,000 ×  ` 4	=	2,00,0000
Less: Excess money on Application	=	50,000
Less: Calls-in-Arrears	=	2,100
Money received on Application		1,47,900

Share First and Final Call

Share First and Final Call due 50,000 Shares ×  ` 3	=	1,50,000
Less: Calls in Arrears on  700 shares ×  ` 3	=	2,100
Money received on First and Final Call		1,47,900

Capital Reserve

Money received on Application from Mr Sharma		=	` 4,200
Less: Securities Premium 700 ×  ` 2		=	` 1,400
Share Forfeiture	Cr.		2,800
Share Forfeiture 700 × Re 1	Dr.		700
Capital Reserve			2,100

 

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