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Question 88 Chapter 8 of +2-A
88. Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹10 each at a premium of ₹ 3 per share payable as follows::
| On application | — | ₹2 |
| On allotment (including premium) | — | ₹5 |
| On the first call | — | ₹3 |
| On the second call | — | ₹3 |
Applications were received for 30,000 shares and allotment was made on a pro-rata basis. Money overpaid on application s was adjusted to the amount due on allotment. Mr Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited. Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for ₹ 9 per share, the whole of Mr Mohit's shares being included.
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Bank A/c | Dr | 60,000 | |||
| To share application A/c | 60,000 | ||||
| (Being the application money received ) | |||||
| Share application A/c | Dr | 60,000 | |||
| To Share capital A/c | 40,000 | ||||
| To share allotment A/c | 20,000 | ||||
| (Being application money transferred to equity share capital ) | |||||
| Share allotment A/c | Dr | 1,00,000 | |||
| To Share capital A/c | 40,000 | ||||
| To Securities premium A/c | 60,000 | ||||
| (Being the allotment money due ) | |||||
| Bank A/c | Dr | 78,400 | |||
| To Share allotment A/c | 78,400 | ||||
| (Being allotment money received capital ) | |||||
| Share first call A/c | Dr | 60,000 | |||
| To Share capital A/c | 60,000 | ||||
| (Being the first call money due ) | |||||
| Bank A/c | Dr | 57,000 | |||
| To Share first call A/c | 57,000 | ||||
| (Being first call money received ) | |||||
| Share capital A/c | Dr | 5,000 | |||
| To share forfeiture A/c | 1,000 | ||||
| To share first call A/c | 4,000 | ||||
| (Being share forfeited ) | |||||
| Bank A/c | Dr | 2,800 | |||
| Securities Premium Reserve A/c | Dr | 1,200 | |||
| To share forfeiture A/c | 1,200 | ||||
| To share allotment A/c | 1,600 | ||||
| To share first call A/c | 1,200 | ||||
| (Being forfeited share reissue ) | |||||
| Share the second call A/c | Dr | 58,800 | |||
| To Share capital A/c | 58,800 | ||||
| (Being the Second call money due ) | |||||
| Bank A/c | Dr | 57,000 | |||
| To Share Second call A/c | 57,000 | ||||
| (Being second call money received ) | |||||
| Share capital A/c | Dr | 6,000 | |||
| To share forfeiture A/c | 2,400 | ||||
| To share first call A/c | 1,800 | ||||
| To share second call A/c | 1,800 | ||||
| (Being share forfeited ) | |||||
| Bank A/c | Dr | 7,200 | |||
| Share Forfeiture A/c | Dr | 800 | |||
| To share capital A/c | 8,000 | ||||
| (Being forfeited share reissue ) | |||||
| Share forfeiture A/c | Dr | 2,000 | |||
| To capital Reserve A/c | 2,000 | ||||
| (Being the gain on reissue transferred to capital reserve ) | |||||
| Particulars |
Details |
Amount |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| (a) Share Capital | 1,98,800 | |
| (b) Reserves and Surplus | 60,800 | |
| (c) Money Received against Share Warrants | ||
| 2. Share Application Money Pending Allotment | ||
| 3. Non-Current Liabilities | ||
| 4. Current Liabilities | ||
| II. Assets | ||
| 1.Non-Current Assets | ||
| (a) Fixed Assets | ||
| Tangible Assets | ||
| 2. Current Assets | ||
| (d) Cash and Cash equivalents | 2,59,600 | |
| Total | 2,59,600 |
| Particulars |
Details |
Amount |
|---|---|---|
| Share capital | ||
| Authorized capital | ||
| Equity share of Rs ….each | ||
| Issued capital | ||
| 20,000 equity shares of Rs 10 each | 2,00,000 | |
| Subscribed capital | ||
| Subscribed and fully paid-up | ||
| 1,98,000 Equity shares of Rs10 each + forefeiture (800) | 1,98,800 | |
| Capital reserve | 2,000 | |
| Building | 58,800 | |
| Cash at bank | 2,59,600 |
Working notes -
| Shares applied by Mohit | = | 30,000 | * 400 | = | 600 shares |
| 20,000 |
| Amount not paid by Aditya on Allotment | Amount |
|---|---|
| Money received on the application | 1,200 |
| Less: Application money transferred to share capital | (800) |
| Excess received on the application | 400 |
| Amount due on allotment | 2,000 |
| Less: Excess Adjustment | (400) |
| Amount unpaid by Mohit | 1,600 |
| Calculation of Amount to be transferred to Capital Reserve - | |
| Amount forfeited on Mohit's 400 shares (600*2) | 1,200 |
| Amount forfeited on jolly’s 400 shares (400 * 4) | (1600) |
| Total credit balance in share forfeiture | 2,800 |
| Less: Discount allowed on 800 shares reissued | (800) |
| Amount to be transferred to Capital Reserve | 2,000 |
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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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