T.S. Grewal Class 12 Vol 2 Chapter 1 Q.103 - Share Capital

Question 103

Visa Ltd. offered 10,000 shares of ₹10 each, payable: on application ₹3, on allotment ₹2, on first call ₹3, on second call ₹2. The public applied for 13,000 shares; 1,000 applications were rejected outright and shares were allotted on a pro-rata basis to the applicants of the remaining 12,000 shares. All shareholders paid the amount due up to allotment, except Mohan, the allottee of 200 shares. His shares were forfeited. The first call was then made. The forfeited shares were reissued at ₹9 per share, ₹8 called-up. The second call has not yet been made. You are required to prepare the Cash Book and pass the Journal entries.

Solution

Shares applied = 13,000; Shares issued = 10,000.

JOURNAL (Books of Visa Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		39,000
	To Share Application A/c			39,000
	(Application money received on 13,000 shares at ₹3 each)
	Share Application A/c    Dr.		39,000
	To Share Capital A/c (10,000 × ₹3)			30,000
	To Share Allotment A/c (2,000 × ₹3)			6,000
	To Bank A/c (1,000 × ₹3)			3,000
	(Application money for 10,000 shares transferred to Share Capital, excess adjusted against Allotment, and rejected applications refunded)
	Share Allotment A/c    Dr.		20,000
	To Share Capital A/c			20,000
	(Allotment due on 10,000 shares at ₹2 each)
	Bank A/c    Dr.		13,720
	To Share Allotment A/c			13,720
	(Allotment money received, except on Mohan’s 200 shares)
	Share Capital A/c (200 × ₹5)    Dr.		1,000
	To Share Forfeiture A/c			720
	To Share Allotment A/c (200 × ₹2)			280
	(200 shares of Mohan forfeited for non-payment of allotment)
	Share First Call A/c    Dr.		29,400
	To Share Capital A/c			29,400
	(First call due on 9,800 shares at ₹3 each)
	Bank A/c    Dr.		29,400
	To Share First Call A/c			29,400
	(First call received on 9,800 shares)
	Bank A/c (200 × ₹9)    Dr.		1,800
	To Share Capital A/c (200 × ₹8)			1,600
	To Securities Premium Reserve A/c (200 × ₹1)			200
	(200 shares reissued at ₹9 per share, ₹8 called-up)
	Share Forfeiture A/c    Dr.		720
	To Capital Reserve A/c			720
	(Balance in Share Forfeiture of the 200 reissued shares transferred to Capital Reserve)

CASH BOOK (Bank Column Only)

Dr. Particulars	₹	Cr. Particulars	₹
To Share Application A/c	39,000	By Share Application A/c	3,000
To Share Allotment A/c	13,720	By Balance c/d	80,920
To Share First Call A/c	29,400
To Share Capital A/c	1,600
To Securities Premium Reserve A/c	200
Total	83,920	Total	83,920

Working Note: Mohan applied for 200 × 12,000 ÷ 10,000 = 240 shares. Application money paid = 240 × ₹3 = ₹720, of which ₹600 (200 × ₹3) is retained toward his 200 allotted shares and ₹120 excess is adjusted against allotment. Allotment due (200 × ₹2) = ₹400, unpaid = 400 − 120 = ₹280. Amount received on forfeiture = ₹720 (his full original application money, all retained since none is refunded).