Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of ₹10 each at a premium of ₹3 per share. The amount was payable as follows: on application ₹6 per share (including premium ₹1); on allotment ₹3 per share (including premium ₹1); and the balance on the First and Final Call. Applications for 1,80,000 shares were received. Applications for 10,000 shares were rejected, and pro-rata allotment was made to the remaining applicants. Overpayment received on application was adjusted towards the sums due on allotment. All calls were made and were duly received, except allotment and the First and Final Call from Aditya, who was allotted 3,200 shares. His shares were forfeited. Half of the forfeited shares were reissued for ₹43,000, as fully paid-up. Pass the necessary Journal entries for the above transactions in the books of Nitro Paints Ltd. (CBSE 2017)
JOURNAL (Books of Nitro Paints Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bank A/c (1,80,000 × ₹6) Dr. | 10,80,000 | |||
| To Equity Share Application A/c | 10,80,000 | |||
| (Application money received) | ||||
| Equity Share Application A/c Dr. | 10,80,000 | |||
| To Equity Share Capital A/c (1,60,000 × ₹5) | 8,00,000 | |||
| To Securities Premium Reserve A/c (1,60,000 × ₹1) | 1,60,000 | |||
| To Equity Share Allotment A/c (10,000 × ₹6) | 60,000 | |||
| To Bank A/c (10,000 × ₹6) | 60,000 | |||
| (Application money transferred; excess adjusted against allotment; rejected applications refunded) | ||||
| Equity Share Allotment A/c (1,60,000 × ₹3) Dr. | 4,80,000 | |||
| To Equity Share Capital A/c (1,60,000 × ₹2) | 3,20,000 | |||
| To Securities Premium Reserve A/c (1,60,000 × ₹1) | 1,60,000 | |||
| (Allotment money due) | ||||
| Bank A/c Dr. | 4,11,600 | |||
| To Equity Share Allotment A/c | 4,11,600 | |||
| (Allotment money received) | ||||
| Equity Share First and Final Call A/c (1,60,000 × ₹4) Dr. | 6,40,000 | |||
| To Equity Share Capital A/c (1,60,000 × ₹3) | 4,80,000 | |||
| To Securities Premium Reserve A/c (1,60,000 × ₹1) | 1,60,000 | |||
| (Call money due) | ||||
| Bank A/c Dr. | 6,27,200 | |||
| To Equity Share First and Final Call A/c | 6,27,200 | |||
| (Call money received) | ||||
| Equity Share Capital A/c (3,200 × ₹10) Dr. | 32,000 | |||
| Securities Premium Reserve A/c (3,200 × ₹2) Dr. | 6,400 | |||
| To Equity Share Allotment A/c | 8,400 | |||
| To Equity Share First and Final Call A/c | 12,800 | |||
| To Equity Share Forfeiture A/c | 17,200 | |||
| (3,200 shares of Aditya forfeited for non-payment of allotment and the first and final call) | ||||
| Bank A/c Dr. | 43,000 | |||
| To Equity Share Capital A/c (1,600 × ₹10) | 16,000 | |||
| To Securities Premium Reserve A/c | 27,000 | |||
| (1,600 shares, half of those forfeited, reissued for ₹43,000, fully paid-up) | ||||
| Equity Share Forfeiture A/c Dr. | 8,600 | |||
| To Capital Reserve A/c | 8,600 | |||
| (Profit on reissue of the 1,600 shares transferred to Capital Reserve) |
Working Notes: Aditya applied for 1,70,000 ÷ 1,60,000 × 3,200 = 3,400 shares. Application money received (3,400 × ₹6) = ₹20,400, of which 3,200 × ₹6 = ₹19,200 retained toward his allotted shares; excess = ₹1,200. Allotment due (3,200 × ₹3) = ₹9,600, less excess ₹1,200 = ₹8,400 unpaid. Capital Reserve = ₹17,200 × 1,600 ÷ 3,200 = ₹8,600 (no discount, reissued above par).
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.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.109 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.109 - Share Capital" instantly.