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Question 90 Chapter 8 of +2-A
90. Super Star Ltd. issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a premium:
| On application | — | ₹ 3 per share (including ₹ 1 premium), |
| On allotment | — | ₹ 4 per share (including ₹ 1 premium), |
| On the first call | — | ₹ 3 per share |
| On the second and final call | — | ₹ 2 per share. |
Applications were received for 3,000 shares and pro-rata allotment was made on the applications for 2,400 shares. It was decided to utilise excess application money towards the amount due on allotment. Ramesh, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited. Rajesh, who applied for 72 shares failed to pay the two calls and on such failure, his shares were forfeited. Of the shares forfeited, 80 shares were sold to Krishan credited as fully paid-up for ₹ 9 per share, the whole of Ramesh's shares being included. Give journal entries to record the above transactions ( including cash transactions).
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Bank A/c | Dr | 9,000 | |||
| To share application A/c | 9,000 | ||||
| (Being the application money received ) | |||||
| Share application A/c | Dr | 9,000 | |||
| To Share capital A/c | 4,000 | ||||
| To Securities premium A/c | 2,000 | ||||
| To share allotment A/c | 1,200 | ||||
| To Bank A/c | 1,800 | ||||
| (Being application money transferred to equity share capital ) | |||||
| Share allotment A/c | Dr | 8,000 | |||
| To Share capital A/c | 6,000 | ||||
| To Securities premium A/c | 2,000 | ||||
| (Being the allotment money due ) | |||||
| Bank A/c | Dr | 6,664 | |||
| To Share allotment A/c | 6,664 | ||||
| (Being allotment money received capital ) | |||||
| Share first call A/c | Dr | 6,000 | |||
| To Share capital A/c | 6,000 | ||||
| (Being the first call money due ) | |||||
| Bank A/c | Dr | 5,700 | |||
| To Share first call A/c | 5,700 | ||||
| (Being first call money received ) | |||||
| Share capital A/c | Dr | 320 | |||
| Share premium A/c | Dr | 40 | |||
| To share forfeiture A/c | 104 | ||||
| To share Allotment A/c | 136 | ||||
| To share first call A/c | 120 | ||||
| (Being share forfeited ) | |||||
| Share final call A/c | Dr | 3,920 | |||
| To Share capital A/c | 3,920 | ||||
| (Being the final call money due ) | |||||
| Bank A/c | Dr | 3,800 | |||
| To Share first and final call A/c | 3,800 | ||||
| (Being final call money received ) | |||||
| Share capital A/c | Dr | 600 | |||
| To share forfeiture A/c | 300 | ||||
| To share first A/c | 180 | ||||
| To share final call A/c | 120 | ||||
| (Being share forfeited ) | |||||
| Bank A/c | Dr | 720 | |||
| Share Forfeiture A/c | Dr | 80 | |||
| To share capital A/c | 800 | ||||
| (Being forfeited share reissue ) | |||||
| Share forfeiture A/c | Dr | 224 | |||
| To capital Reserve A/c | 224 | ||||
| (Being the gain on reissue transferred to capital reserve ) | |||||
Working notes -
| Shares applied by Ramesh | = | 2,400 | * 40 | = | 48 shares |
| 2,000 |
| Amount not paid by Aditya on Allotment | Amount |
|---|---|
| Money received on application(48 shares * Rs 3) | 4800 |
| Less: Application money transferred to share capital | (80) |
| Excess received on the application | 64 |
| Amount due on allotment | 160 |
| Less: Excess Adjustment | (24) |
| Amount unpaid by Ramesh | 136 |
| Shares allotted to Rajesh = | = | 2,000 | * 72 | = | 60shares |
| 2,400 |
| Amount | |
|---|---|
| Share Allotment due | 8,000 |
| Less: Excess money on application | (1,200) |
| Less: calls in arrear on the allotment | (136) |
| Money received on the allotment | 6,664 |
| Amount | |
|---|---|
| Money due on the first call (2,000 * Rs 3) | 6,000 |
| Less: calls in arrear for Ramesh (40 *Rs 3) | (120) |
| Less: calls in arrear on Rajesh (60* Rs 3) | (180) |
| Money received on the first call | 5,700 |
| Share final call | Amount |
|---|---|
| Money due on the first call | 3,920 |
| Less: calls in arrear on Rajesh | (120) |
| Money received on Final call | 3,800 |
| Money received from Ramesh | Amount |
|---|---|
| Money received from Ramesh | 144 |
| Share forfeiture Cr. | 400 |
| Less: share forfeiture Dr. | (40) |
| Capital reserve of Ramesh | 64 |
| Money received from Rajesh | Amount |
|---|---|
| Share forfeiture Cr. | 200 |
| Less: share forfeiture Dr. | (40) |
| Capital reserve of Rajesh | 160 |
Calculation of Total on Capital Reserve
Total Capital Reserve
= Capital Reserve of 40 shares of Ramesh + Capital Reserve of 40 shares of Rajesh
= Rs.64 + 160 = Rs.224
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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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