T.S. Grewal Class 12 Vol 2 Chapter 1 Q.10 - Share Capital

Question 10

Shuchi Ltd. was registered with a capital of ₹5,00,000 in shares of ₹10 each, and issued 20,000 such shares at a premium of ₹2 per share, payable ₹2 per share on application, ₹5 per share on allotment (including premium), and ₹2 per share on first call, made three months later. All money on application and allotment was duly received, but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares, and another shareholder holding 1,000 shares failed to pay the first call money. Pass Journal entries to record the above transactions and show how they will be shown in the company’s Balance Sheet.

Solution

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		40,000
	To Equity Share Application A/c			40,000
	(Application money received on 20,000 shares @ ₹2)
	Equity Share Application A/c    Dr.		40,000
	To Equity Share Capital A/c			40,000
	(Application money transferred to Share Capital)
	Equity Share Allotment A/c    Dr.		1,00,000
	To Equity Share Capital A/c (20,000 × ₹3)			60,000
	To Securities Premium Reserve A/c (20,000 × ₹2)			40,000
	(Allotment money due, including premium)
	Bank A/c    Dr.		1,00,000
	To Equity Share Allotment A/c			1,00,000
	(Allotment money received in full)
	Equity Share First Call A/c    Dr.		40,000
	To Equity Share Capital A/c			40,000
	(First call of ₹2 made on 20,000 shares)
	Bank A/c    Dr.		38,900
	Calls-in-Arrears A/c    Dr.		2,000
	To Equity Share First Call A/c			40,000
	To Calls-in-Advance A/c (300 × ₹3)			900
	(First call received from 18,700 shares at ₹2 and 300 shares at ₹5 including advance for the uncalled ₹3; 1,000 shares in arrears)

BALANCE SHEET OF SHUCHI LTD. (Extract)

Particulars	Note No.	₹
1. Shareholders’ Funds: Share Capital	1	1,38,000
Reserves and Surplus	2	40,000
2. Other Current Liabilities	3	900
Total		1,78,900

NOTES TO ACCOUNTS

Particulars	₹
1. Share Capital
Authorised: 50,000 Equity Shares of ₹10 each	5,00,000
Issued: 20,000 Equity Shares of ₹10 each	2,00,000
Subscribed and Fully Paid-up (of what is called): 19,000 shares, ₹7 called-up	1,33,000
Subscribed but not Fully Paid-up: 1,000 shares, ₹7 called-up	7,000
Less: Calls-in-Arrears (1,000 × ₹2)	(2,000)
Total Share Capital	1,38,000
2. Reserves and Surplus
Securities Premium Reserve (20,000 × ₹2)	40,000
3. Other Current Liabilities
Calls-in-Advance (300 × ₹3)	900

Note: The source states the allotment amount as ₹10 per share, but this is inconsistent with the ₹7 called-up figure used throughout the rest of its own solution; the figures only reconcile if the allotment amount is ₹5 per share (as used above).