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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Saregama Ltd. invited applications for issuing 80,000 equity shares of ₹100 each at a premium of ₹10. The amount was payable as follows: on Application ₹30, on Allotment ₹30 (including a premium of ₹10), on First Call ₹30, on Final Call the balance. Applications for 1,20,000 shares were received. Allotment was made on a pro-rata basis to all applicants; excess money received on application was adjusted against the sums due on allotment. Dhwani, who was allotted 1,600 shares, failed to pay the allotment money, and Sargam, who applied for 6,000 shares, did not pay the first call money. These shares were forfeited immediately after the first call. 2,000 of these shares (including all of Dhwani’s shares) were reissued to Tarang for ₹95 per share, as ₹80 paid-up. Pass the necessary Journal entries in the books of Saregama Ltd., opening Calls-in-Arrears and Calls-in-Advance Accounts, given that the final call has not been made. (CBSE Sample Paper 2019)
JOURNAL (Books of Saregama Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bank A/c (1,20,000 × ₹30) Dr. | 36,00,000 | |||
| To Equity Share Application A/c | 36,00,000 | |||
| (Application money received) | ||||
| Equity Share Application A/c Dr. | 36,00,000 | |||
| To Equity Share Capital A/c (80,000 × ₹30) | 24,00,000 | |||
| To Equity Share Allotment A/c | 12,00,000 | |||
| (Application money transferred to Share Capital; excess adjusted against Allotment) | ||||
| Equity Share Allotment A/c (80,000 × ₹30) Dr. | 24,00,000 | |||
| To Equity Share Capital A/c (80,000 × ₹20) | 16,00,000 | |||
| To Securities Premium Reserve A/c (80,000 × ₹10) | 8,00,000 | |||
| (Allotment due on 80,000 shares, including ₹10 premium) | ||||
| Bank A/c Dr. | 11,76,000 | |||
| Calls-in-Arrears A/c Dr. | 24,000 | |||
| To Equity Share Allotment A/c | 12,00,000 | |||
| (Allotment money received, except on Dhwani’s 1,600 shares) | ||||
| Equity Share First Call A/c (80,000 × ₹30) Dr. | 24,00,000 | |||
| To Equity Share Capital A/c | 24,00,000 | |||
| (First call due on 80,000 shares) | ||||
| Bank A/c (74,400 × ₹30) Dr. | 22,32,000 | |||
| Calls-in-Arrears A/c (1,600 × ₹30) Dr. | 48,000 | |||
| Calls-in-Arrears A/c (4,000 × ₹30) Dr. | 1,20,000 | |||
| To Equity Share First Call A/c | 24,00,000 | |||
| (First call received, except on Dhwani’s 1,600 and Sargam’s 4,000 shares) | ||||
| Equity Share Capital A/c (1,600 × ₹80) Dr. | 1,28,000 | |||
| Securities Premium Reserve A/c (1,600 × ₹10) Dr. | 16,000 | |||
| To Calls-in-Arrears A/c (allotment) | 24,000 | |||
| To Calls-in-Arrears A/c (first call) | 48,000 | |||
| To Forfeited Shares A/c | 72,000 | |||
| (Dhwani’s 1,600 shares forfeited for non-payment of allotment and the first call) | ||||
| Equity Share Capital A/c (4,000 × ₹80) Dr. | 3,20,000 | |||
| To Calls-in-Arrears A/c (first call) | 1,20,000 | |||
| To Forfeited Shares A/c | 2,00,000 | |||
| (Sargam’s 4,000 shares forfeited for non-payment of the first call) | ||||
| Bank A/c (2,000 × ₹95) Dr. | 1,90,000 | |||
| To Equity Share Capital A/c (2,000 × ₹80) | 1,60,000 | |||
| To Securities Premium Reserve A/c (2,000 × ₹15) | 30,000 | |||
| (2,000 shares — all 1,600 of Dhwani’s and 400 of Sargam’s — reissued to Tarang at ₹95 per share, ₹80 paid-up) | ||||
| Forfeited Shares A/c [72,000 + (400 × ₹50)] Dr. | 92,000 | |||
| To Capital Reserve A/c | 92,000 | |||
| (Balance of Forfeited Shares Account on the reissued shares transferred to Capital Reserve) |
Working Note: Dhwani’s full forfeited amount (₹72,000, for all 1,600 shares) transfers in full, since all her shares were reissued. Sargam’s forfeited amount per share = 2,00,000 ÷ 4,000 = ₹50; for the 400 reissued shares = 400 × ₹50 = ₹20,000. Total = 72,000 + 20,000 = ₹92,000 (no discount, since both reissue prices exceed the ₹80 called-up target).
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