Volume-2 | Chapter-1 | Question 16 to 20 | Issue of Share Capital | Ts grewal solution 2020-21 | Class-12th

Page No 8.113:

Question 16:

Citizen Watches Ltd. invited applications for 50,000 shares of  ` 10 each payable  ` 3 on application ,  ` 4 on allotment and balance  on first  and final call . Applications were received for 60,000 shares . Applications were accepted for 50,000 shares and remaining applications were rejected . All calls were made and received except First and Final call on 500 shares .

Pass the journal entries in the books of Citizen Watches Ltd .

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bank A/c (60,000×3)	Dr.		1,80,000
	To Share Application A/c				1,80,000
	(Received application money on 60,000 shares)
	Share Application A/c	Dr.		1,80,000
	To Share Capital A/c (50,000×3)				1,50,000
	To Bank A/c (10,000×3)				30,000
	(Transfer of application money to Share Capital)
	Share Allotment A/c (50,000×4)	Dr.		2,00,000
	To Share Capital A/c				2,00,000
	(Allotment due on 50,000 shares )
	Bank A/c	Dr.		2,00,000
	To Share Allotment A/c				2,00,000
	(Allotment received)
	Share First and Final Call A/c (50,000×3)	Dr.		1,50,000
	To Share Capital A/c				1,50,000
	(Call money due on 50,000 shares)
	Bank A/c (49,500×3)	Dr.		1,48,500
	To Share First and Final Call A/c				1,48,500
	(Received call money on 49,500 shares)

 

 

Page No 8.113:

Question 17:

Eastern Company Limited , having an authorised capital of  ` 10,00,000 divided into shares of  `  10 each , issued 50,000 shares at a premium of  `  3 per share payable as follows:

On Application	` 3 per share;
On Allotment (including premium)	` 5 per share;
On first call (due three months after allotment )and the balance as when required.	` 3 per share;

Applications were received for 60,000 shares and the directors allotted the shares as follows:
(i) Applicants for 40,000 shares received in full.
(ii) Applicants for 15,000 shares received an allotment of 8,000 shares.
(iii) Applicants for 5,000 shares received 2,000 shares on allotment , excess money being returned.
All amounts due on allotment were received.
The first call was made and the money was received except on 100 shares.
Give journal and cash book entries to record these transactions of the company . Also prepare the Balance Sheet of the company.

Answer:

Books of Eastern Company Limited
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Share Application A/c	Dr.		1,80,000
	To Share Capital A/c				1,50,000
	To Share Allotment A/c				30,000
	(Share Application money for 50,000 shares transferred To Share Capital Account and the excess money transferred To Share Allotment Account)
	Share Allotment A/c	Dr.		2,50,000
	To Share Capital A/c				1,00,000
	To Share Premium A/c				1,50,000
	(Allotment money due on 50,000 shares @  ` 5 per share including  ` 3 security premium)
	Share First Call A/c	Dr.		1,50,000
	To Share Capital A/c				1,50,000
	(First call due on 50,000 shares @  ` 3 per share)

 

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
	Share Application		1,80,000
	Share Allotment		2,20,000		Balance c/d		5,49,700
	Share First Call		1,49,700
			5,49,700				5,49,700

 

Eastern Company Limited
Balance Sheet
Particulars	Note No.	Amount  ( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	3,99,700
b. Reserves and Surplus	2	1,50,000
2. Non–Current Liabilities
3. Current Liabilities
Total		5,49,700
II. Assets
1. Non–Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	5,49,700
Total		5,49,700

NOTES TO ACCOUNTS

Note No.	Particulars		Amount   ( `)
1	Share Capital
	Authorised Share Capital
	1,00,000 shares of  ` 10 each		10,00,000
	Issued Share Capital
	50,000 shares of  ` 10 each		5,00,000
	Subscribed, Called up and Paid up Share Capital
	50,000 shares of  ` 10 each,  ` 8 called–up	4,00,000
	Less: Calls–in–Arrears	(300)	3,99,700
2	Reserves and Surplus
	Securities Premium		1,50,000
3	Cash and Cash Equivalents
	Cash at Bank		5,49,700

Page No 8.113:

Question 18:

Varun Ltd. issued  ` 10,00,000 shares of  ` 100 each at a premium of  ` 20 for subscription payable as:

 ` 10 per share on application,
 ` 40 per share and  ` 10 premium on allotment, and
 ` 50 per share and  ` 10 premium on final payment.

Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received.
Pass necessary entries in the company's books to record the above transactions. Also, prepare company's Balance Sheet on completion of the above transactions.

Answer:

Amount payable as:

Application	`	10
Allotment	`	50	(40 + 10)
First and Final Call	`	60	(50 + 10)
		120	(100 + 20)

 

Books of Varun Limited Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bank A/c	Dr.		2,30,000
	To Share Application A/c				2,30,000
	(Share application money received for 23,000 shares at  ` 10 each)
	Share Application A/c	Dr.		2,30,000
	To Share Capital A/c				1,00,000
	To Share Allotment A/c				50,000
	To Bank A/c				80,000
	(Share application of 10,000 shares transferred to Share Capital,  ` 50,000 adjusted on allotment and remaining amount returned)
	Share Allotment A/c	Dr.		5,00,000
	To Share Capital A/c				4,00,000
	To Securities Premium A/c				1,00,000
	(Share allotment due on 10,000 shares at  ` 50 each including  ` 10 premium)
	Bank A/c	Dr.		4,50,000
	To Share Allotment A/c				4,50,000
	(Share allotment money received)
	Share First and Final Call A/c	Dr.		6,00,000
	To Share Capital A/c				5,00,000
	To Securities Premium A/c				1,00,000
	(First and final call due on 10,000 shares at  ` 60 each including  ` 10 premium)
	Bank A/c	Dr.		6,00,000
	To Share First and Final Call A/c				6,00,000
	(Share first and final call money received)

 

Posting in the Company's Balance Sheet

Varun Limited
Balance Sheet
Particulars	Note No.	Amount  ( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	10,00,000
b. Reserves and Surplus	2	2,00,000
2. Non-Current Liabilities
3. Current Liabilities
Total		12,00,000
II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents	3	12,00,000
Total		12,00,000

 

NOTES TO ACCOUNTS

Note No.	Particulars	Amount ( `)
1	Share Capital
	Authorised Share Capital
	……  shares of  ` 100 each	-
	Issued Share Capital
	10,000 shares of  ` 100 each	10,00,000
	Subscribed, Called up and Paid up Share Capital
	10,000 shares of  ` 100 each	10,00,000
2	Reserves and Surplus
	Securities Premium	2,00,000
3	Cash and Cash Equivalents
	Cash at Bank	12,00,000

 

Working Notes:

Applied Shares	Issued Shares	Money received on Application @  ` 10 each	Money transferred to Share Capital @  ` 10 each	Excess	Allotment due  @  ` 50 each	Excess money adjusted on Allotment	Excess money after Allotment
12,000	1,000	1,20,000	10,000	1,10,000	50,000	50,000	60,000 (return)
2,000	NIL	20,000	–	20,000 (return)
9,000	9,000	90,000	90,000	–	4,50,000	–	–
23,000	10,000	2,30,000	1,00,000		5,00,000	50,000	60,000

 

Share Allotment due (10,000 share ×  ` 50)	5,00,000
Less: Excess application money adjusted on allotment	50,000
Money received on Allotment	4,50,000

Page No 8.114:

Question 19:

Sugandh Ltd. issued 60,000 shares of  ` 10 each at a premium of  ` 2 per share payable as  ` 3 on application,  ` 5(including premium) on allotment and the balance on first and final call. Applications were received for 92,000 shares. The Directors resolved to allot as:

(i)	Applicants of 40,000 shares	30,000 shares,
(ii)	Applicants of 50,000 shares	30,000 shares,
(iii)	Applicants of 2,000 shares	Nil.

Mohan, who had applied for 800 shares in Category
(i) and Sohan, who was allotted 600 shares in Category
(ii) failed to pay the allotment money. Calculate amount received on allotment.

Answer:

Issued Shares	60,000
Less: Applied Shares	92,000
Over-subscribed Shares	32,000

Payable as:

`	3	on Application
`	5	on Allotment (Including  ` 2 premium)
`	4	on First and Final Call
`	12	(10 + 2)
Applied		Allotted	Money Received on Application @  ` 3	Money adjusted on Appliction @  ` 3	Excess	Allotment due @  ` 5	Excess money adjusted on Allotment @  ` 5
40,000		­30,000	1,20,000	90,000	30,000	1,50,000	30,000
50,000		30,000	1,50,000	90,000	60,000	1,50,000	60,000
2,000		NIL	6,000	–	6,000
					(Bank)
92,000		60,000	2,76,000	1,80,000		3,00,000	90,000

 

Mohan

Number of shares allotted to Mohan=30,000/40,000×800= 600 shares

Money Received on Application 800×3	=	2,400
Application money adjusted to Share Capital 600×3	=	1,800
Execs Money on Application	=	600
Allotment due on 600 shares ×  ` 5	=	3,000
Less: Adjustment of excess money on application	=	600
Calls-in-Arrears by Mohan		2,400

Sohan

Number of shares allotted to Sohan=50,000/30,000×600= 1000 shares

Money received on Application 1,000×3	=	3,000
Application money adjusted to Share Capital 600×3	=	1,800
Excess money on application	=	1,200
Allotment due on 600 Shares ×  ` 5	=	3,000
Less: Adjustment of excess money on application	=	1,200
Calls-in-Arrears by Sohan	=	1,800
Allotment due on 60,000 shares ×  ` 5	=	3,00,000
Less: Excess Application money adjusted on Allotment	=	90,000
		2,10,000
Less: Calls-in-Arrears by Mohan	=	2,400
Less: Calls-in-Arrears by Sohan	=	1,800
Money received on allotment	=	2,05,800

Page No 8.114:

Question 20:

Sony Media Ltd. issued 50,000 shares  of  ` 10 each payable   ` 3 on application ,  ` 4 on allotment and balance on first and final call . Applications were received for 1,00,000 shares and allotment was made as follows :
(i) Applicants for 60,000 shares were allotted 30,000 shares,
(ii) Applicants for 40,000 shares were allotted 20,000 shares,
Anupam to whom 1,000 shares were allotted from category
(i) failed to pay the allotment money.
Pass journal entries up to allotment .

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bank A/c (1,00,000 × 3)	Dr.		3,00,000
	To Share Application A/c				3,00,000
	(Received application money on 1,00,000 shares)
	Share Application A/c	Dr.		3,00,000
	To Share Capital A/c (50,000 × 3)				1,50,000
	To Share Allotment A/c				1,50,000
	(Transfer of application money to Share Capital)
	Share Allotment A/c (50,000 × 4)	Dr.		2,00,000
	To Share Capital A/c				2,00,000
	Allotment due on 50,000 shares)
	Bank A/c (W.N. 1)	Dr.		49,000
	To Share Allotment A/c				49,000
	(Allotment money received after adjustment of excess on application and arrears)

Working Notes:

1) Computation of amount received on allotment:

 

Allotment due (50,000 × 4)	=	`. 2,00,000
Less: Amount received on application in excess (on 50,000 shares @  ` . 3 each)	=	`. 1,50,000
		`. 50,000
Less: Amount due but not received on shares of Anupam		1,000
		`. 49,000

2)  Calculation of Amount not Received on the shares of Anupam

Shares allotted to Anupam=1,000

Shares applied by Anupam=1,000×60,000/30,000=2,000

Amount due on allotment of Anupam's Share (4 × 1,000)	=	4,000
Less: Excess received on application (3 × 2,000 – 3 × 1,000)	=	3,000
		1,000

 

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