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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ruchi Ltd. issued for public subscription 40,000 Equity Shares of ₹10 each at a premium of ₹2 per share, payable: on application ₹2 per share, on allotment ₹5 per share (including premium), on first call ₹2 per share, on second and final call ₹3 per share. Applications were received for 60,000 shares. Allotment was made on a pro-rata basis to the applicants for 48,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards the sums due on allotment. Ram, to whom 1,600 shares were allotted, failed to pay the allotment money, and Shyam, to whom 2,000 shares were allotted, failed to pay the two calls. These shares were subsequently forfeited after the second and final call was made. All the forfeited shares were reissued as fully paid-up at ₹8 per share. Give the necessary Journal entries for the above transactions.
Application ₹2, Allotment ₹5 (₹3 + ₹2 premium), First Call ₹2, Second and Final Call ₹3 — total ₹12 (₹10 + ₹2 premium).
JOURNAL (Books of Ruchi Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bank A/c Dr. | 1,20,000 | |||
| To Equity Share Application A/c | 1,20,000 | |||
| (Application money received on 60,000 shares at ₹2 each) | ||||
| Equity Share Application A/c Dr. | 1,20,000 | |||
| To Equity Share Capital A/c | 80,000 | |||
| To Equity Share Allotment A/c | 16,000 | |||
| To Bank A/c | 24,000 | |||
| (Application money for 40,000 shares transferred to Share Capital, ₹16,000 excess adjusted against Allotment, and ₹24,000 refunded on rejected applications) | ||||
| Equity Share Allotment A/c Dr. | 2,00,000 | |||
| To Equity Share Capital A/c | 1,20,000 | |||
| To Securities Premium Reserve A/c | 80,000 | |||
| (Allotment due on 40,000 shares at ₹5 each, including ₹2 premium) | ||||
| Bank A/c Dr. | 1,76,640 | |||
| To Equity Share Allotment A/c | 1,76,640 | |||
| (Allotment received on all shares except Ram’s 1,600 shares) | ||||
| Equity Share First Call A/c Dr. | 80,000 | |||
| To Equity Share Capital A/c | 80,000 | |||
| (First call due on 40,000 shares at ₹2 each) | ||||
| Bank A/c Dr. | 72,800 | |||
| To Equity Share First Call A/c | 72,800 | |||
| (First call received on 36,400 shares; Ram’s and Shyam’s 3,600 shares failed to pay) | ||||
| Equity Share Second and Final Call A/c Dr. | 1,20,000 | |||
| To Equity Share Capital A/c | 1,20,000 | |||
| (Second and final call due on 40,000 shares at ₹3 each) | ||||
| Bank A/c Dr. | 1,09,200 | |||
| To Equity Share Second and Final Call A/c | 1,09,200 | |||
| (Second and final call received on 36,400 shares; Ram’s and Shyam’s 3,600 shares failed to pay) | ||||
| Equity Share Capital A/c Dr. | 16,000 | |||
| Securities Premium Reserve A/c Dr. | 3,200 | |||
| To Share Forfeiture A/c | 3,840 | |||
| To Equity Share Allotment A/c | 7,360 | |||
| To Equity Share First Call A/c | 3,200 | |||
| To Equity Share Second and Final Call A/c | 4,800 | |||
| (1,600 shares held by Ram forfeited for non-payment of allotment and both calls, including premium) | ||||
| Equity Share Capital A/c Dr. | 20,000 | |||
| To Share Forfeiture A/c | 10,000 | |||
| To Equity Share First Call A/c | 4,000 | |||
| To Equity Share Second and Final Call A/c | 6,000 | |||
| (2,000 shares held by Shyam forfeited for non-payment of both calls) | ||||
| Bank A/c (3,600 × ₹8) Dr. | 28,800 | |||
| Share Forfeiture A/c (3,600 × ₹2) Dr. | 7,200 | |||
| To Equity Share Capital A/c | 36,000 | |||
| (3,600 shares reissued at ₹8 per share, fully paid-up) | ||||
| Share Forfeiture A/c Dr. | 6,640 | |||
| To Capital Reserve A/c | 6,640 | |||
| (Balance in Share Forfeiture Account transferred to Capital Reserve) |
Working Notes:
Ram applied for 48,000 ÷ 40,000 × 1,600 = 1,920 shares. Money received on application (1,920 × ₹2) = ₹3,840, of which ₹3,200 (1,600 × ₹2) retained for his allotted shares, excess ₹640. Allotment due (1,600 × ₹5) = ₹8,000, less excess ₹640 = ₹7,360 unpaid.
Capital Reserve: Share Forfeiture on Ram’s shares (his full application money, since none refunded) = ₹3,840; on Shyam’s shares (2,000 × ₹5) = ₹10,000; total = ₹13,840, less discount on reissue ₹7,200 = ₹6,640.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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