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Question 40 Chapter 8 of +2-Part-1
40. (Prorata Allotment/Forfeiture/Reissue) A Limited Company invites 50,000 equity shares of Rs. 10 each payable as follows:
On application Rs.3
On allotment RS. 4
On first call Rs. 2
On final call the balance.
Applications were received for 55,000 shares. Allotments were made on the following basis:
(i)To applicants for 35,000 shares-in full.
(ii)To applicants for 20,000 shares-15,000 shares.
Excess money paid on application was utilized towards allotment money. A shareholder who was allotted 1,500 shares out of the group applying for 20,000 shares failed to pay allotment money and money due on calls. These shares were forfeited. 1,000,forfeited shares were re-issued as fully paid on receipt of Rs. 8 per share.
Required: Show the journal entries in the books of company.
Journal
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| A) | Bank A/c | Dr. | 1,65,000 | ||
| To Equity Share Application A/c | 1,65,000 | ||||
| (Being the receipt of application money on 55,000 shares @ Rs.3 per share ) | |||||
| B) | Equity Share Application A/c | Dr. | 1,65,000 | ||
| To Equity Share capital A/c | 1,50,000 | ||||
| To Equity Share allotment A/c | 15,000 | ||||
| (Being the transfer of application money of 50,000 shares ) | |||||
| C) | Equity Share Allotment A/c | Dr. | 2,00,000 | ||
| To Equity Share capital A/c | 2,00,000 | ||||
| (Being allotment money due on allotment of 50,000 shares @ Rs. 4 per share ) | |||||
| D) | Bank A/c | Dr. | 1,80,500 | ||
| To Equity Share allotment A/c | 1,80,500 | ||||
| (Being balance allotment money received on 48,500 shares) | |||||
| E) | Equity Share first Call A/c | Dr. | 1,00,000 | ||
| To Equity Share capital A/c | 1,00,000 | ||||
| (Being amount due on first call of 50,000 share @ Rs. 2 per share) | |||||
| F) | Bank A/c | Dr. | 97,000 | ||
| To Equity Share first Call A/c | 97,000 | ||||
| (Being amount received on final call of 19500 share ) | |||||
| G) | Equity Share Second & final Call A/c | Dr. | 50,000 | ||
| To Equity Share capital A/c | 50,000 | ||||
| (Being amount due on final call of 48,500 share) | |||||
| H) | Bank A/c (19,600 X 3) | Dr. | 48,500 | ||
| To Equity Share Second & final Call A/c | 48,500 | ||||
| (Being amount received on final call of 48,500 share | |||||
| I) | Equity Share capital A/c | Dr. | 15,000 | ||
| To Equity Share Allotment A/c | 4,500 | ||||
| To Equity Share first call A/c | 3,000 | ||||
| To Equity Share Second final call A/c | 1,500 | ||||
| To Equity Share Forfeited A/c | 6,000 | ||||
| (Being 1500 shares fortified as per board reso. No.) | |||||
| J) | Bank A/c (500 X 8 ) | Dr. | 8,000 | ||
| Share Fortified A/c (500X2) | Dr. | 2,000 | |||
| To Equity Share capital A/c | 10,000 | ||||
| (Being 400 shares reissued @ 20 % discount ) | |||||
| K) | Share Fortified A/c (6,000 X 1,000/15,000-2,000) | Dr. | 2,000 | ||
| To Capital Reserve A/c | 2,000 | ||||
| (Being balance in share fortified transferred to capital reserve) | |||||
It all about Question 40 Chapter 8 of +2-Part-1, If you have any problem please comment below.
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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