T.S. Grewal Class 12 Vol 2 Chapter 1 Q.102 - Share Capital

Question 102

Himalaya Company Ltd. issued for public subscription 1,20,000 equity shares of ₹10 each at a premium of ₹2 per share, payable: with Application ₹3 per share, on Allotment (including premium) ₹5 per share, on First Call ₹2 per share, on Second and Final Call ₹2 per share. Applications were received for 1,60,000 shares. Allotment was made on a pro-rata basis, and excess money on application was adjusted against the amount due on allotment. Rohan, to whom 4,800 shares were allotted, failed to pay for the two calls; these shares were subsequently forfeited after the second call was made. All the forfeited shares were reissued to Teena, fully paid, at ₹7 per share. Record the Journal entries and show the transactions relating to share capital in the company’s Balance Sheet. (NCERT)

Solution

JOURNAL (Books of Himalaya Company Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		4,80,000
	To Share Application A/c			4,80,000
	(Application money received on 1,60,000 shares at ₹3 each)
	Share Application A/c    Dr.		4,80,000
	To Equity Share Capital A/c			3,60,000
	To Share Allotment A/c			1,20,000
	(Application money for 1,20,000 shares transferred to Share Capital; remaining adjusted against Allotment)
	Share Allotment A/c    Dr.		6,00,000
	To Equity Share Capital A/c			3,60,000
	To Securities Premium Reserve A/c			2,40,000
	(Allotment due on 1,20,000 shares at ₹5 each, including ₹2 premium)
	Bank A/c    Dr.		4,80,000
	To Share Allotment A/c			4,80,000
	(Allotment money received)
	Share First Call A/c    Dr.		2,40,000
	To Equity Share Capital A/c			2,40,000
	(First call due on 1,20,000 shares at ₹2 each)
	Bank A/c    Dr.		2,30,400
	To Share First Call A/c			2,30,400
	(First call received on 1,15,200 shares; Rohan’s 4,800 shares failed to pay)
	Share Final Call A/c    Dr.		2,40,000
	To Equity Share Capital A/c			2,40,000
	(Final call due on 1,20,000 shares at ₹2 each)
	Bank A/c    Dr.		2,30,400
	To Share Final Call A/c			2,30,400
	(Final call received on 1,15,200 shares; Rohan’s 4,800 shares failed to pay)
	Equity Share Capital A/c (4,800 × ₹10)    Dr.		48,000
	To Share First Call A/c (4,800 × ₹2)			9,600
	To Share Final Call A/c (4,800 × ₹2)			9,600
	To Share Forfeiture A/c (4,800 × ₹6)			28,800
	(4,800 shares forfeited for non-payment of the first and final call)
	Bank A/c    Dr.		33,600
	Share Forfeiture A/c    Dr.		14,400
	To Equity Share Capital A/c			48,000
	(4,800 shares reissued to Teena at ₹7 per share, fully paid-up)
	Share Forfeiture A/c    Dr.		14,400
	To Capital Reserve A/c			14,400
	(Share Forfeiture balance of the 4,800 reissued shares transferred to Capital Reserve)

Himalaya Company Ltd. Balance Sheet

Particulars	Note No.	₹
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	12,00,000
b. Reserves and Surplus	2	2,54,400
Total		14,54,400
II. Assets
2. Current Assets
a. Cash and Cash Equivalents	3	14,54,400
Total		14,54,400

NOTES TO ACCOUNTS

Note No.	Particulars	₹
1	Share Capital — Issued, Subscribed, Called-up and Paid-up: 1,20,000 shares of ₹10 each	12,00,000
2	Reserves and Surplus
	Securities Premium	2,40,000
	Capital Reserve	14,400
	Total	2,54,400
3	Cash and Cash Equivalents — Cash at Bank	14,54,400