T.S. Grewal Class 12 Vol 2 Chapter 1 Q.101 - Share Capital

Question 101

Alfa Ltd. invited applications for issuing 75,000 equity shares of ₹10 each. The amount was payable as follows: on Application and Allotment ₹4 per share, on First Call ₹3 per share, on Second and Final Call, the balance. Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on a pro-rata basis, and excess money received with applications was transferred towards the sums due on first call. Vibha, who was allotted 750 shares, failed to pay the first call; her shares were immediately forfeited. Afterwards, the second call was made. The amount due on the second call was also received except on 1,000 shares applied by Monika; her shares were also forfeited. All the forfeited shares were reissued to Mohit for ₹9,000, fully paid-up. Pass the necessary Journal entries in the books of Alfa Ltd. for the above transactions. (CBSE 2015)

Solution

JOURNAL (Books of Alfa Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		4,00,000
	To Equity Share Application and Allotment A/c			4,00,000
	(Application money received on 1,00,000 shares)
	Equity Share Application and Allotment A/c    Dr.		4,00,000
	To Equity Share Capital A/c			3,00,000
	To Equity Share First Call A/c			1,00,000
	(Application money transferred to Share Capital; excess money adjusted against the First Call)
	Equity Share First Call A/c    Dr.		2,25,000
	To Equity Share Capital A/c			2,25,000
	(First call due on 75,000 shares at ₹3 each)
	Bank A/c (2,25,000 − 1,00,000 − 1,250)    Dr.		1,23,750
	To Equity Share First Call A/c			1,23,750
	(First call received, net of the excess already adjusted and Vibha’s shortfall)
	Equity Share Capital A/c    Dr.		5,250
	To Equity Share Forfeiture A/c			4,000
	To Equity Share First Call A/c			1,250
	(Vibha’s 750 shares forfeited for non-payment of the first call)
	Equity Share Second and Final Call A/c    Dr.		2,22,750
	To Equity Share Capital A/c			2,22,750
	(Second and final call due on the remaining 74,250 shares)
	Bank A/c (2,22,750 − 2,250)    Dr.		2,20,500
	To Equity Share Second and Final Call A/c			2,20,500
	(Second and final call received, except on Monika’s 750 shares)
	Equity Share Capital A/c    Dr.		7,500
	To Equity Share Forfeiture A/c			5,250
	To Equity Share Second and Final Call A/c			2,250
	(Monika’s 750 shares forfeited for non-payment of the second and final call)
	Bank A/c    Dr.		9,000
	Equity Share Forfeiture A/c    Dr.		6,000
	To Equity Share Capital A/c			15,000
	(1,500 forfeited shares reissued to Mohit for ₹9,000, fully paid-up)
	Equity Share Forfeiture A/c    Dr.		3,250
	To Capital Reserve A/c			3,250
	(Excess amount on forfeiture transferred to Capital Reserve)

Working Notes:

WN1 (Vibha): Shares applied by Vibha = 1,00,000 ÷ 75,000 × 750 = 1,000 shares. Amount received on application (1,000 × ₹4) = ₹4,000. Amount transferred to Share Capital (750 × ₹4) = ₹3,000. Excess application money = ₹1,000. Amount due on first call (750 × ₹3) = ₹2,250. Amount not received on first call = 2,250 − 1,000 = ₹1,250.

WN2 (Monika): Shares allotted to Monika = 1,000 × 75,000 ÷ 1,00,000 = 750 shares. Amount not received on second call (750 × ₹3) = ₹2,250.