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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Question 85 Chapter 8 of +2-A
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 the 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 a 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 failed 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.
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Share application A/c | Dr | 3,00,000 | |||
| To Share capital A/c | 1,50,000 | ||||
| To Securities premium A/c | 1,00,000 | ||||
| To Shares Allotment A/c | 50,000 | ||||
| (Being application money transferred to equity share capital ) | |||||
| Share allotment A/c | Dr | 2,00,000 | |||
| To Share capital A/c | 2,00,000 | ||||
| (Being the allotment money due ) | |||||
| Share first call A/c | Dr | 1,50,000 | |||
| To Share capital A/c | 1,50,000 | ||||
| (Being the first call money due ) | |||||
| Share capital A/c | Dr | 7,000 | |||
| To share forfeiture A/c | 2,800 | ||||
| To share allotment A/c | 2,100 | ||||
| To share first and final call A/c | 2,100 | ||||
| (Being share forfeited ) | |||||
| Share Forfeiture A/c | Dr | 700 | |||
| To Share capital A/c | 700 | ||||
| (Being forfeited share reissue ) | |||||
| Share forfeiture A/c | Dr | 2,100 | |||
| To capital Reserve A/c | 2,100 | ||||
| (Being the gain on reissue transferred to capital reserve ) | |||||
| Dr. | Cash A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
|---|---|---|---|---|---|---|---|
| To equity share application a/c | 3,25,000 | By equity share application a/c | 25,000 | ||||
| To equity share allotment a/c | 1,47,900 | ||||||
| To equity share first, call a/c | 1,47,900 | ||||||
| To equity share capital a/c | 6,300 | ||||||
| By Balance C/d | 6,02,100 | ||||||
| 6,27,100 | 6,27,100 | ||||||
Working notes -
| Excess money on Application | Amount |
|---|---|
| Money received on application (840 * Rs 5 ) | 4,200 |
| Less: Application money transferred to share capital + security premium (1,400 ) | (2,100 + 1,400) |
| 700 |
| Money received on Allotment | Amount |
|---|---|
| Share allotment due (50,000 * R 4) | 2,00,000 |
| Less: Excess money on application + calls in arrear (3600 * Rs 2 ) | (50,000+ 2,100)) |
| 1,47,900 |
| Money received on first and final call | Amount |
|---|---|
| Share first and final call money due ( 4,000 * Rs 3) | 1,50,000 |
| Less: Calls in arrear by Ram and Shyam ( 3,600 * Rs 3 ) | (2,100) |
| 1,47,900 |
| Particulars | Amount |
|---|---|
| Share Forfeiture (Cr.) | 4,200 |
| less: Share Forfeiture on Shyam shares | (1,400) |
| Less: Share Forfeiture Debit | (700) |
| Balance in Share Forfeiture A/c | 2,100 |
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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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