Question 93:
Max Ltd.
invited applications for 2,00,000 Equity Shares
of ` 10 each to be issued at 20% premium. The money
payable per shares was: on application ` 5, on
allotment ` 4 (including premium of ` 2),
first call ` 2 and final call ` 1.
Applications were received for 2,40,000 shares and
allotment was made as:
(i) to applicants for 1,00,000 shares— in full,
(ii) to applicants for 80,000 shares—60,000 shares,
(iii) to applicants for 60,000 shares—40,000 shares.
Applicants of 1,000 shares falling in Category
(i) and applicants of 1,200 shares falling in
Category
(ii) failed to pay allotment money. These shares were forfeited on failure to
pay first call. Holders of 1,200 shares falling in Category
(iii) failed to pay the first and final call and these shares were forfeited
after final call.
1,300 shares[1,000 of Category(i)
and 300 of Category (ii)] were reissued at ` 8 per
share as fully paid-up.
Journalise the above transactions. Prepare Cash book
and Balance Sheet.
Answer:
Applied
shares 2,40,000
|
Allotment made as: |
|
Payable as: |
|
|||
|
Applied |
|
Allotted |
|
Application |
` 5 |
|
|
1,00,000 |
|
1,00,000 |
|
Allotment |
` 4 |
(2 + 2) |
|
80,000 |
|
60,000 |
|
First Call |
` 2 |
|
|
60,000 |
|
40,000 |
|
Final Call |
Re 1 |
|
|
2,40,000 |
|
2,00,000 |
|
|
` 12 |
(10 + 2)
per share |
|
Cash Book |
|||||
|
Dr. |
|
Cr. |
|||
|
Date |
Particulars |
` |
Date |
Particulars |
` |
|
|
|
|
|
|
|
|
|
Equity
Share Application (2,40,000 × ` 5) |
12,00,000 |
|
Balance
c/d |
|
|
|
Equity
Share Allotment (See note-2) |
5,93,900 |
|
|
|
|
|
Equity
Share First Call (See note-3) |
3,93,800 |
|
|
|
|
|
Equity
Share First Call |
1,96,900 |
|
|
|
|
|
(1,96,900
shares × Re 1) |
|
|
|
|
|
|
Equity
Share Capital (1,000 shares of category i) |
8,000 |
|
|
|
|
|
Equity
Share Capital (300 shares of category ii) |
2,400 |
|
23,95,000 |
|
|
|
|
23,95,000 |
|
23,95,000 |
|
|
|
|
|
|
|
|
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
|
|
Equity
Share Application A/c |
Dr. |
|
12,00,000 |
|
|
|
To Equity Share Capital A/c |
|
|
10,00,000 |
|
|
|
To Equity Share allotment A/c |
|
|
2,00,000 |
|
|
|
(Equity
Share application money of 2,00,000 shares at ` 5 each transferred to Share
Capital and ` 2,00,000
adjusted on allotment) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Share Allotment A/c |
Dr. |
|
8,00,000 |
|
|
|
To Equity Share Capital A/c |
|
|
4,00,000 |
|
|
|
To Securities Premium A/c |
|
|
4,00,000 |
|
|
|
(Share
allotment due on 2,00,000 shares at ` 4 each including ` 2 premium) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Share First Call A/c |
Dr. |
|
4,00,000 |
|
|
|
To Equity Share Capital A/c |
|
|
4,00,000 |
|
|
|
(First
call due on 2,00,000 shares at ` 2 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Share Capital A/c |
Dr. |
|
9,000 |
|
|
|
Securities
Premium A/c |
Dr. |
|
2,000 |
|
|
|
To Share Forfeiture A/c (900
shares × ` 5) |
|
|
5,000 |
|
|
|
To Equity Share Allotment A/c (900
shares × ` 4) |
|
|
4,000 |
|
|
|
To Equity Share First Call A/c
(900 shares × ` 2) |
|
|
2,000 |
|
|
|
(1,000
shares of category (i) ` 10 each, on which ` 8 had called-up, forfeited
for the non-payment of amount due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Share Capital A/c |
Dr. |
|
8,100 |
|
|
|
Securities
Premium A/c |
Dr. |
|
1,800 |
|
|
|
To Share Forfeiture A/c |
|
|
6,000 |
|
|
|
To Equity Shares Allotment A/c |
|
|
2,100 |
|
|
|
To Equity Shares First-Call A/c |
|
|
1,800 |
|
|
|
(900
shares of category (ii) forfeited for the non-payment of amount due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share
Final Call A/c |
Dr. |
|
1,98,100 |
|
|
|
To Equity Shared Capital A/c |
|
|
1,98,100 |
|
|
|
(Final
call due on 1,98,100 shares at Re 1 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Share Capital A/c |
Dr. |
|
12,000 |
|
|
|
To Share Forfeiture A/c |
|
|
8,400 |
|
|
|
To Share First Call A/c |
|
|
2,400 |
|
|
|
To Share Final Call A/c |
|
|
1,200 |
|
|
|
(1,200
shares of category (iii) forfeited for the non-payment amount due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Forfeiture A/c |
Dr. |
|
2,000 |
|
|
|
To Equity Share Capital A/c |
|
|
2,000 |
|
|
|
(Loss on
re-issue of 1,000 shares of category (i) charged
from Share Forfeiture Account) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Forfeiture A/c |
Dr. |
|
600 |
|
|
|
To Equity Share Capital A/c |
|
|
600 |
|
|
|
(Loss on
re-issue of 300 of category (ii) charged from Share Forfeiture Account) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Forfeiture A/c |
Dr. |
|
4,400 |
|
|
|
To Capital Reserve A/c |
|
|
4,400 |
|
|
|
(Balance
in Share Forfeiture Account of 1,300 re-issued shares transferred to Capital
Reserve) |
|
|
|
|
|
|
|
|
|
|
|
As per the Schedule III of Companies Act, 2013, the
Company's Balance Sheet is presented as follows.
|
Max Ltd. |
||
|
Balance Sheet |
||
|
Particulars |
Note No. |
( `) |
|
I. Equity
and Liabilities |
|
|
|
1.
Shareholders’ Funds |
|
|
|
a. Share
Capital |
1 |
19,94,400 |
|
b.
Reserves and Surplus |
2 |
4,00,600 |
|
2.
Non-Current Liabilities |
|
|
|
3. Current
Liabilities |
|
|
|
Total |
|
23,95,000 |
|
|
|
|
|
II. Assets |
|
|
|
1.
Non-Current Assets |
|
|
|
2. Current
Assets |
|
|
|
a. Cash
and Cash Equivalents |
3 |
23,95,000 |
|
Total |
|
23,95,000 |
NOTES TO ACCOUNTS
|
|
|||
|
Note No. |
Particulars |
( `) |
|
|
1 |
Share
Capital |
|
|
|
|
Authorised Share
Capital |
|
|
|
|
……. Equity
Shares of ` 10 each |
- |
|
|
|
Issued
Share Capital |
|
|
|
|
2,00,000
Equity Shares of ` 10 each |
20,00,000 |
|
|
|
Subscribed,
Called-up and Paid-up Share Capital |
|
|
|
|
1,98,200
Equity Shares of ` 10 each |
19,82,000 |
|
|
|
Add: Shares
Forfeited (600 shares × ` 6.66) |
4,000 |
|
|
|
Add:
Shares Forfeited (1,200 shares × ` 7) |
8,400 |
19,94,400 |
|
|
|
|
|
|
2 |
Reserves
and Surplus |
|
|
|
|
Securities
Premium |
3,96,200 |
|
|
|
Capital
Reserve |
4,400 |
4,00,600 |
|
|
|
|
|
|
3 |
Cash and
Cash Equivalents |
|
|
|
|
Cash at
Bank |
23,95,000 |
|
|
|
|
|
|
Working
Notes:
1. 1,200
shares of Category (ii)
Number of
share allotted = 60,000/80,000 ×1,200=900shares
|
Money
received on application (1,200 shares × ` 5) |
= |
6,000 |
|
Less:
Application money transferred to Share Capital (900 shares × ` 5) |
= |
4,500 |
|
Excess
money received from 1,200 shares on Application |
= |
1,500 |
|
Money due
on Allotment (900 shares × ` 4) |
= |
3,600 |
|
Less: Excess
money on Application |
= |
1,500 |
|
Calls-in-Arrears
on Allotment of category (ii) |
|
2,100 |
2. Share
Allotment
|
Money due
on Allotment (2,00,000 shares × ` 4) |
= |
8,00,000 |
|
Less: Excess
money on Application |
= |
2,00,000 |
|
Less:
Calls-in-Arrears 1,000 shares of category (i)
(1,000 shares × ` 4) |
= |
4,000 |
|
Less: Calls-in-Arrears
1,200 shares of category (ii) |
= |
2,100 |
|
Money
received on Allotment |
= |
5,93,900 |
3. Share
First Call
|
First Call
due on 2,00,000 shares × ` 2 |
= |
4,00,000 |
|
Less:
Calls-in-Arrears on 3,100 shares × ` 2 (1,000 + 900 + 1,200 shares of
category (i), (ii) and (iii) respectively) |
|
(6,200) |
|
Money
received on First Call |
|
3,93,800 |
4. Share
Final Call
|
Money due
on Share Final Call (2,00,000
– 1900) × ` 1 |
= |
1,98,100 |
|
Less:
Calls-in-Arrears of 1,200 shares of Category (iii) |
|
1,200 |
|
Money
received on Final Call |
|
1,96,900 |
Capital
Reserve
Calculation
of Share Forfeiture of 1,000 shares of category (i)
|
Share Forfeiture |
` 5,000 |
Cr. |
|
Less: Share Forfeiture |
` 2,000 |
Dr. |
|
Capital Reserve of 1,000 shares (balance
after re-issue) |
` 3,000 |
Cr. |
Calculation
of Share Forfeiture of 300 shares of category (ii)
|
Share Forfeiture = 6,000/900 Credit |
= |
` |
6.67 |
per share |
|
Less: Share
Forfeiture Debit |
= |
` |
2 |
per share |
|
Capital Reserve (balance after re-issue) |
= |
` |
4.67 |
per share |
Capital
Reserve of 300 shares = Capital Reserve (per share) × No. of shares
re-issued = ` 4.67 × 300 shares = ` 1,400
Total
Capital Reserve of 1,300 shares = Capital Reserve of 1,000 shares of category (i) + Capital Reserve of 300 shares of category (ii) = 3,000
+ 1,400 = ` 4,400
Question 94:
XYZ Ltd. issued
a prospectus inviting applications for 2,000 shares of ` 10 each at a premium
of ` 4 per share , payable as:
|
On
application |
-- |
` 6 (including ` 1
premium) |
|
On
allotment |
-- |
` 2 (including ` 1
premium) |
|
On
first call |
-- |
` 3 (including ` 1
premium) |
|
On second
and final call |
-- |
` 3 (including ` 1
premium) |
Applications were received for 3,000 shares and pro rata allotment was
made on the applications for 2,400 shares. It was decided to utilise excess application money towards the amount due on
allotment.
X, to whom 40 shares were allotted, failed to pay the allotment money
and on his subsequent failure to pay the first call, his shares were forfeited.
Y, who applied for 72 shares failed to pay the two calls and on his such
failure, his shares were forfeited.
Of the shares forfeited, 80 shares were sold to Z credited as fully
paid-up for ` 9 per share , the whole of Y's shares being included .
Prepare Journal, Cash Book and the Balance Sheet.
Answer:
Applied
shares 3,000
|
Allotment made as: |
|
Payable as: |
|
|||
|
Applied |
|
Allotted |
|
Application |
` 6 |
(5 + 1) |
|
2,400 |
|
2,000 |
|
Allotment |
` 2 |
(1 + 1) |
|
600 |
|
NIL |
|
First Call |
` 3 |
(2 + 1) |
|
|
|
|
|
Final Call |
` 3 |
(2 + 1) |
|
3,000 |
|
2,000 |
|
|
` 14 |
(10 + 4) per
share |
|
Cash Book |
|||||
|
Dr. |
|
|
|
|
Cr. |
|
Date |
Particulars |
Bank ` |
Date |
Particulars |
Bank ` |
|
|
|
|
|
|
|
|
|
Share
Application |
18,000 |
|
Share
Application |
3,600 |
|
|
(3,000
shares × ` 6) |
|
|
(600
shares × ` 6) |
|
|
|
Share
Allotment (see note-2) |
1,568 |
|
|
|
|
|
Share
First Call (see note-4) |
5,700 |
|
|
|
|
|
Share
Final Call (see note-5) |
5,700 |
|
|
|
|
|
Share
Capital |
720 |
|
Balance
c/d |
28,088 |
|
|
(80
shares × ` 9) |
|
|
|
|
|
|
|
31,688 |
|
|
31,688 |
|
|
|
|
|
|
|
|
Journal Entries |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
|
|
Share
Application A/c |
Dr. |
|
14,400 |
|
|
|
To Share Capital A/c |
|
|
10,000 |
|
|
|
To Securities Premium A/c |
|
|
2,000 |
|
|
|
To Share Allotment A/c |
|
|
2,400 |
|
|
|
(Share
application money of 2,000 shares transferred to Share Capital and Securities
Premium at ` 5 and Re
1 each respectively and ` 2,400 adjusted on allotment) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Allotment A/c |
Dr. |
|
4,000 |
|
|
|
To Share Capital A/c |
|
|
2,000 |
|
|
|
To Securities Premium A/c |
|
|
2,000 |
|
|
|
(Allotment
due on 2,000 shares at ` 2 each including Re 1 premium) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
First Call A/c |
Dr. |
|
6,000 |
|
|
|
To Share Capital A/c |
|
|
4,000 |
|
|
|
To Securities Premium A/c |
|
|
2,000 |
|
|
|
(First
call due on 2,000 shares at ` 3 each including Re 1 premium) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Capital A/c (40 shares × ` 8) |
Dr. |
|
320 |
|
|
|
Securities
Premium A/c |
Dr. |
|
72 |
|
|
|
To Share Forfeiture A/c |
|
|
240 |
|
|
|
To Share Allotment A/c |
|
|
32 |
|
|
|
To Share First Call A/c |
|
|
120 |
|
|
|
(40 shares
of ` 10 each ` 8 called with premium forfeited
for non-payment of amount due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Final Call A/c |
Dr. |
|
5,880 |
|
|
|
To Share Capital A/c |
|
|
3,920 |
|
|
|
To Securities Premium A/c |
|
|
1,960 |
|
|
|
(Final
call due on 1,960 shares at ` 3 each including Re 1 premium) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Capital A/c |
Dr. |
|
600 |
|
|
|
Securities
Premium A/c |
Dr. |
|
120 |
|
|
|
To Share Forfeiture A/c |
|
|
360 |
|
|
|
To Share First Call A/c |
|
|
360 |
|
|
|
(60 shares
forfeited for non-payment of amount due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
720 |
|
|
|
Share
Forfeiture A/c |
Dr. |
|
80 |
|
|
|
To Shares Capital A/c |
|
|
800 |
|
|
|
(80 shares
of ` 10 each
re-issued at ` 9 per share fully paid-up) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Forfeiture A/c |
Dr. |
|
400 |
|
|
|
To Capital Reserve |
|
|
400 |
|
|
|
(Balance
of 80 reissued shares in Share Forfeiture Account transferred to Capital
Reserve) |
|
|
|
|
|
|
|
|
|
|
|
As per the Schedule III of Companies Act, 2013, the
Company's Balance Sheet is presented as follows.
|
XYZ Ltd. |
||
|
Balance Sheet |
||
|
Particulars |
Note No. |
( `) |
|
I. Equity
and Liabilities |
|
|
|
1.
Shareholders’ Funds |
|
|
|
a. Share
Capital |
1 |
19,920 |
|
b.
Reserves and Surplus |
2 |
8,168 |
|
2.
Non-Current Liabilities |
|
|
|
3. Current
Liabilities |
|
|
|
Total |
|
28,088 |
|
|
|
|
|
II. Assets |
|
|
|
1.
Non-Current Assets |
|
|
|
2. Current
Assets |
|
|
|
a. Cash
and Cash Equivalents |
3 |
28,088 |
|
Total |
|
28,088 |
NOTES TO ACCOUNTS
|
|
|||
|
Note No. |
Particulars |
( `) |
|
|
1 |
Share
Capital |
|
|
|
|
Authorised Share
Capital |
|
|
|
|
……. shares
of ` 10 each |
- |
|
|
|
Issued Share
Capital |
|
|
|
|
2,000
shares of ` 10 each |
20,000 |
|
|
|
Subscribed,
Called-up and Paid-up Share Capital |
|
|
|
|
1,980
shares of ` 10 each |
19,800 |
|
|
|
Add: Shares Forfeited (20 shares × ` 6) |
120 |
19,920 |
|
|
|
|
|
|
2 |
Reserves
and Surplus |
|
|
|
|
Securities
Premium |
7,768 |
|
|
|
Capital
Reserve |
400 |
8,168 |
|
|
|
|
|
|
3 |
Cash and
Cash Equivalents |
|
|
|
|
Cash at
Bank |
28,088 |
|
|
|
|
|
|
Working
Notes:
1. X’s Shares
Number of
share applied by X =2,400/2,000×40=48 Shares
|
Money
received on application (48 shares × ` 6) |
= |
288 |
|
Less: Money
transferred to Shares Capital (40 shares × ` 5) |
= |
200 |
|
Less:
Securities Premium (40 shares × Re 1) |
= |
40 |
|
Excess
money on application from X |
= |
48 |
|
Utilisation of excess application money
received from X |
|
|
|
Share
Capital due on Allotment (40 shares × Re 1) |
= |
40 |
|
Less: Excess
money on Application from X |
= |
48 |
|
Excess
money after adjustment of Share Capital on Allotment |
= |
8 |
|
|
|
|
|
Securities
Premium due on Allotment (40 shares × Re 1) |
= |
40 |
|
Less: Excess
money after adjustment of Share Capital on Allotment |
= |
8 |
|
Calls-in-Arrears
of Securities Premium on Allotment |
= |
32 |
2. Share
Allotment
|
Money due
on allotment (2,000 shares × ` 2) |
= |
4,000 |
|
Less: Excess
money on Application |
= |
2,400 |
|
|
= |
1,600 |
|
Less:
Calls-in-Arrears on X‘s shares (securities premium) |
= |
32 |
|
Money
received on allotment |
= |
` 1,568 |
3. Y’s
Shares
Number of
shares allotted =2,000/2,400×72= 60 shares
4. Share
First Call
|
Money due
on Share First Call (2,000 shares × ` 3) |
= |
6,000 |
|
Less:
Calls-in-Arrears on X‘s shares (40 shares × ` 3) |
= |
120 |
|
Less:
Calls-in-Arrears on Y’s shares (60 shares × ` 3) |
= |
180 |
|
Money
received on Share First Call |
= |
5,700 |
5. Share
Final Call
|
Money due
on share Final Call (1,960 shares × ` 3) |
= |
5,880 |
|
Less:
Calls-in-Arrears on Y’s shares (60 shares × ` 3) |
= |
180 |
|
Money
received on Share Final Call |
= |
5,700 |
Capital
Reserve
X’s shares
|
Money
received from X for 40 shares |
= |
288 |
|
Less:
Securities Premium adjusted on Application |
= |
40 |
|
Less:
Securities Premium adjusted on Allotment |
= |
8 |
|
Balance in
the Share Forfeiture before re-issue of shares Cr. |
|
240 |
|
Share
Forfeiture Credit =240/40 |
= |
` |
6 |
per share |
|
Share
forfeiture Debit |
= |
` |
1 |
per share |
|
|
|
` |
5 |
per share |
Capital
Reserve on re-issue of 20 shares = ` 5 × 20
shares = ` 100
Y’s Shares
Share
Forfeiture on 60 Shares of Y
|
Share
Forfeiture Credit |
` 6 |
per share |
|
Less: Share
Forfeiture Debit |
` 1 |
per share |
|
|
` 5 |
per share |
Capital
Reserve on re-issue of 60 shares of Y = `
5 × 60 shares = ` 300
Total
Capital Reserve on 80 shares = Capital Reserve on re-issue of 20 shares of X +
Capital Reserve on re-issue of 60 shares of Y = 100 + 300 = `
400
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