Volume-2 | Chapter-1 | Question 76 to 80 | Issue of Share Capital | Ts grewal solution 2020-21 | Class-12th

Page No 8.122:

Question 76:

Alfa Ltd. invited applications for issuing 75,000 equity shares of   `  10 each. The amount was payable as follows:

 On application and allotment

  —

   ` 4 per share ,

 On first Call

  —

  `  3 per share,

 On  second and final Call

  —

 balance.


Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due  on first call. Vibha who was allotted 750 shares failed to pay the first call . Her shares were immediately forfeited . Afterwards the second call was made. The amount due on second call was also received except on 1,000 shares applied by Monika . Her shares were also forfeited. All the forefited shares were reissued to Mohit for  `9,000 as fully paid-up.
Pass necessary journal entries in the Books of Alfa Ltd . for the above transactions.



Answer:

In the books of Alfa Ltd.

Journal Entry

Date

Particulars

L.F.

Debit Amount

 `

Credit Amount

 `

 

Bank A/c

Dr.

 

4,00,000

 

 

  To Equity Share Application and Allotment A/c

 

 

 

4,00,000

 

(Application money received on 1,00,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application and Allotment A/c

Dr.

 

4,00,000

 

 

  To Equity Share Capital A/c

 

 

 

3,00,000

 

  To Equity Share First Call A/c

 

 

 

1,00,000

 

(Application money transferred to share capital account and excess money is adjusted in first call account)

 

 

 

 

 

 

 

 

 

 

 

Equity Share First Call A/c

Dr.

 

2,25,000

 

 

To Equity Share Capital A/c

 

 

 

2,25,000

 

(Amount due on first call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,25,000 – 1,00,000 – 1,250)

Dr.

 

1,23,750

 

 

  To Equity Share First Call A/c

 

 

 

1,23,750

 

(Amount received on first call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

5,250

 

 

  To Equity Share Forfeiture A/c

 

 

 

4,000

 

  To Equity Share First Call A/c

 

 

 

1,250

 

(Vibha’s shares were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Second and Final Call A/c

Dr.

 

2,22,750

 

 

To Equity Share Capital A/c

 

 

 

2,22,750

 

(Amount due on second and final call after forfeiting Vibha’s shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (2,22,750 – 2,250)

Dr.

 

2,20,500

 

 

  To Equity Share Second and Final Call A/c

 

 

 

2,20,500

 

(Amount received on second and final call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

7,500

 

 

  To Equity Share Forfeiture A/c

 

 

 

5,250

 

  To Equity Share Second and Final Call A/c

 

 

 

2,250

 

(Monika’s shares were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,000

 

 

Equity Share Forfeiture A/c

Dr.

 

6,000

 

 

To Equity Share Capital A/c

 

 

 

15,000

 

(Forfeited shares were reissued for  ` 9,000 as fully paid-up)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c

Dr.

 

3,250

 

 

To Capital Reserve A/c

 

 

 

3,250

 

(Excess amount on forfeiture is transferred to capital reserve)

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

 

WN1: Calculation of Amount not received on First Call

Share applied by vibha=1,00,000/75,000×750= 1,000 share    

Amount received on 1000 share@4  `. Each=  `. 4,000

Amount transferred to share capital A/c(750×4)=3,000

Excess application and allotment money received=1000

Amount due on first call @3  `. 2,250          

Amount not received on first call @3=1,250(2,250-1,000)

 

WN2: Calculation of Amount not received on Second Call

Allotted share to Monika =75,000×1000/1,00,000=750 shares

Amount not received on second call=2,250(750×3)



Page No 8.122:

Question 77:

Himalaya Company Limited issued for public subscription  1,20,000 equity shares of  `  10 each at a premium for  `  2 per share payable as under:

 With Application

       —

  ` 3 per share,

 On allotment

(including premium)

       —

 `  5 per share,

 On First call

       —

 `  2 per share 

 On Second and Final call

       —

 `  2 per share.


Applications were received for 1,60,000 shares . Allotment was made on pro rata basis . Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited  after the second call was made . All the shares forfeited were reissued to Teena as fully paid at  `  7 per share.
Record journal entries and show the transactions relating to share capital in the company's Balance Sheet. 



Answer:

Books of Himalaya Company Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

( `)

Credit

Amount

( `)

 

Bank A/c

Dr.

 

4,80,000

 

 

To Share Application A/c

 

 

4,80,000

 

(Share Application money received for 1,60,000 shares @  ` 3 per share)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

4,80,000

 

 

To Equity Share Capital A/c

 

 

3,60,000

 

To Share Allotment A/c

 

 

1,20,000

 

(Share Application for 1,20,000 shares @  ` 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

6,00,000

 

 

To Equity Share Capital A/c

 

 

3,60,000

 

To Securities Premium

 

 

2,40,000

 

(Share Allotment due on 1,20,000 shares @  ` 5 per share including  ` 2 Securities Premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,80,000

 

 

To Share Allotment A/c

 

 

4,80,000

 

(Share allotment for 1,20,000 shares @  ` 5 per share received)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

2,40,000

 

 

To Equity Share Capital A/c

 

 

2,40,000

 

(Share First Call due on 1,20,000 shares @  ` 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,30,400

 

 

To Share First Call A/c

 

 

2,30,400

 

(Share First Call received on 1,15,200 shares @  ` 2 per share and 4,800 shares failed to pay)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

2,40,000

 

 

To Equity Share Capital A/c

 

 

2,40,000

 

(Share Final call due on 1,20,000 shares @  ` 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,30,400

 

 

To Share Final Call A/c

 

 

2,30,400

 

(Share Final Call received on 1,15,200 shares @  ` 2 per share and 4,800 shares failed to pay)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c (4,800×10)

Dr.

 

48,000

 

 

To  Share First Call A/c (4,800×2)

 

 

 

9,600

 

To  Share Final Call A/c (4,800×2)

 

 

 

9,600

 

To  Share Forfeiture A/c (4,800×6)

 

 

 

28,800

 

(4,800 shares forfeited for the non–payment of First Call and Final Call)

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

33,600

 

 

Share Forfeiture A/c

Dr.

 

14,400

 

 

To  Equity Share Capital

 

 

 

48,000

 

(4,800 shares reissued @  ` 7 per share, fully paid–up)

 

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

14,400

 

 

To Capital Reserve A/c

 

 

 

14,400

 

(Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)

 

 

 

 

 

 

 

 

 

 

 

Himalaya Company Limited

Balance Sheet

Particulars

Note No.

Amount 

( `)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

12,00,000

b. Reserves and Surplus

2

2,54,400

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

14,54,400

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

14,54,400

Total

 

14,54,400


NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

( `)

1

Share Capital

 

 

Authorised Share Capital

 

 

…….. shares of  ` 10 each

 

Issued Share Capital

 

 

1,20,000 shares of  ` 10 each

12,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,20,000 shares of  ` 10 each

12,00,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

2,40,000

 

 

Capital Reserve

14,400

2,54,400

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

14,54,400

 

 

 



Page No 8.123:

Question 78:



Answer:

In the books of Saregama Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

( `)

Credit

Amount

( `)

 

 

 

 

 

 

 

Bank A/c (1,20,000×30)

Dr.

 

36,00,000

 

 

  To Equity Share application A/c

 

 

 

36,00,000

 

(Being share application money received)

 

 

 

 

   

 

Equity Share application A/c

Dr.

 

36,00,000

 

 

  To Equity Share Capital A/c

 

 

 

24,00,000

  To Equity Share Allotment A/c

(Being share application money transferred to share capital and allotment)

12,00,000

 

 

 

 

 

 

 

Equity Share Allotment A/c

   (80,000 × 30)

Dr.

36,00,000

 

  To Equity Share Capital A/c

   (80,000 × 20)

 

 

 

16,00,000

 To securities premium reserve A/c

    (80,000 × 10)

8,00,000

 

(Allotment money due)

 

 

 

 

 

Bank A/c

Dr.

11,76,000

Calls in arrears A/c

Dr.

24,000

 

  To Equity Share Allotment A/c

 

12,00,000

 

(Allotment money received)

 

 

 

 

 

Equity Share First Call A/c

(80,000 × 3)

Dr.

24,00,000

 

  To Equity Share Capital A/c

 

24,00,000

 

(Call money due)

 

 

 

 

 

Bank A/c (1,60,000 × 2)

Dr.

22,32,000

Calls in arrears A/c (1600×30)

Dr.

48,000

Calls in arrears A/c (4000×30)

Dr.

1,20,000

 

  To Equity Share First Call A/c

 

24,00,000

 

(Call money received)

 

 

 

 

 

Equity Share Capital A/c

Dr.

1,28,000

Securities premium reserve a/c

Dr.

16,000

 

 To Calls in arrears A/c (allotment)

 

24,000

 To Calls in arrears A/c (1600×30)

48,000

 To share forfeited A/c (2400×30)

72,000

(Being shares of Dhanwani forfeited)

 

 

 

Equity Share Capital A/c (400×95)

Dr.

38,000

 To Calls in arrears A/c (400×80)

32,000

 

 To share forfeited A/c (400×15)

6,000

 

(Being shares of Dhanwani forfeited)

 

Share forfeiture A/c

[72,000+(400×50)]

Dr.

92,000

 To Capital Reserve A/c

92,000

(Being balance of forfeiture transferred to Capital reserve)

 

 



Page No 8.123:

Question 79:

Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of  ` 10 each at a premium  of    ` 2 per share. The amount was payable as follows:

       On application

  —

  ` 2 per share,

       On allotment

  —

  ` 5 per share

(including premium)

       On first and final call

  —

 Balance.
 


Applications for 1,50,000  shares were received . Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment . All calls were made. Manu who had applied for 3,000 shares failed to pay the amount  due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call . Shares of both Manu and Madhur  were forfeited . The forfeited shares were reissued at  
` 9 per share as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.
 



Answer:

In the books of Jeevan Dhara Ltd.

Journal Entry

Date

Particulars

L.F.

Debit Amount

 `

Credit Amount

 `

 

Bank A/c

Dr.

 

3,00,000

 

 

  To Equity Share Application A/c

 

 

 

3,00,000

 

(Application money received on 1,50,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Application A/c

Dr.

 

3,00,000

 

 

  To Equity Share Capital A/c

 

 

 

2,40,000

 

  To Equity Share Allotment A/c

 

 

 

60,000

 

(Amount of application transferred to Share Capital and excess money is adjusted towards allotment)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Allotment A/c

Dr.

 

6,00,000

 

 

To Equity Share Capital A/c

 

 

 

3,60,000

 

To Securities Premium A/c

 

 

 

2,40,000

 

(Amount due on allotment)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

5,29,200

 

 

To Equity Share Allotment A/c

 

 

 

5,29,200

 

(Amount received on share allotment)

 

 

 

 

 

 

 

 

 

 

 

Equity Share First and Final Call A/c

Dr.

 

6,00,000

 

 

To Equity Share Capital A/c

 

 

 

6,00,000

 

(Amount due on first and final call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

5,76,000

 

 

  To Equity Share First and Final Call A/c

 

 

 

5,76,000

 

(Amount received on first and final call)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c

Dr.

 

48,000

 

 

Securities Premium A/c

Dr.

 

4,800

 

 

  To Equity Share Forfeiture A/c

 

 

 

18,000

 

To Equity Share Allotment A/c

 

 

 

10,800

 

  To Equity Share First and Final Call A/c

 

 

 

24,000

 

(Shares of Manu and Madhur were forfeited)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

43,200

 

 

Equity Share Forfeiture A/c

Dr.

 

4,800

 

 

To Equity Share Capital A/c

 

 

 

48,000

 

(Forfeited shares were reissued for  ` 9 as fully paid-up)

 

 

 

 

 

 

 

 

 

 

 

Equity Share Forfeiture A/c

Dr.

 

13,200

 

 

To Capital Reserve A/c

 

 

 

13,200

 

(Excess amount on forfeiture is transferred to capital reserve)

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

 

WN1: Calculation of Amount not received on Allotment and First and Final Call

Share allotted to Monu = 1,20,000 / 1,50,000× 3,000 =  `. 2,400 shares

Amount Received on 3,000 shares of  `. 2 each =  `. 6,000

Amount transfer to share capital account (2,400 x 2) =  `. 4,800

Excess money received on application =  `. 1,200

Amount not received on first and final call =  `. 12,000 (2,400 x 5) 1,200

Amount due on allotment at the rate of 5 rupees each =  `. 12,000 (7,200 + 4,800)

Amount not received on security premium reserve =  `. 4,800

Amount not received on allotment =  `. 6,000 (7,200–1,200)

Amount not received on first and final call =  `. 12,000 (2,400 x 5)

 

WN2: Calculation of amount not received from Madhur

Amount not received on first and final call=  `.  12,000 (2,400 x 5)



Page No 8.123:

Question 80:

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

 

 


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