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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
XYZ Ltd. invited applications for issuing 50,000 Equity Shares of ₹10 each. The amount was payable as: on application ₹3 per share, on allotment ₹4 per share, on first and final call ₹3 per share. Applications were received for 75,000 shares and pro-rata allotment was made as: applicants for 40,000 shares were allotted 30,000 shares; applicants for 35,000 shares were allotted 20,000 shares. Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money; his shares were forfeited immediately after allotment. Shamu, who had applied for 700 shares out of the group applying for 35,000 shares, failed to pay the first and final call; his shares were also forfeited. Out of the forfeited shares, 1,000 shares, including all of Shamu’s forfeited shares, were reissued at ₹8 per share, as fully paid-up. Pass the necessary Journal entries to record the above transactions.
Issued 50,000 equity shares of ₹10 each; applied 75,000 shares.
JOURNAL (Books of XYZ Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bank A/c Dr. | 2,25,000 | |||
| To Equity Share Application A/c | 2,25,000 | |||
| (Application money received on 75,000 shares at ₹3 each) | ||||
| Equity Share Application A/c Dr. | 2,25,000 | |||
| To Equity Share Capital A/c | 1,50,000 | |||
| To Equity Share Allotment A/c | 75,000 | |||
| (Application money for 50,000 shares transferred to Share Capital; excess adjusted against Allotment) | ||||
| Equity Share Allotment A/c Dr. | 2,00,000 | |||
| To Equity Share Capital A/c | 2,00,000 | |||
| (Allotment due on 50,000 shares at ₹4 each) | ||||
| Bank A/c Dr. | 1,21,400 | |||
| To Equity Share Allotment A/c | 1,21,400 | |||
| (Allotment received, net of the excess adjustment and Ramu’s shortfall) | ||||
| Equity Share Capital A/c (1,200 × ₹7) Dr. | 8,400 | |||
| To Share Forfeiture A/c | 4,800 | |||
| To Equity Share Allotment A/c | 3,600 | |||
| (1,200 shares of Ramu, ₹7 called-up, forfeited for non-payment of allotment) | ||||
| Equity Share First and Final Call A/c Dr. | 1,46,400 | |||
| To Equity Share Capital A/c | 1,46,400 | |||
| (First and final call due on 48,800 shares at ₹3 each) | ||||
| Bank A/c Dr. | 1,45,200 | |||
| To Equity Share First and Final Call A/c | 1,45,200 | |||
| (Call received on 48,400 shares; Shamu’s 400 shares failed to pay) | ||||
| Equity Share Capital A/c Dr. | 4,000 | |||
| To Share Forfeiture A/c (400 × ₹7) | 2,800 | |||
| To Equity Share First and Final Call A/c | 1,200 | |||
| (400 shares of Shamu forfeited for non-payment of the first and final call) | ||||
| Bank A/c Dr. | 8,000 | |||
| Share Forfeiture A/c Dr. | 2,000 | |||
| To Equity Share Capital A/c | 10,000 | |||
| (1,000 shares reissued at ₹8 per share, fully paid-up) | ||||
| Share Forfeiture A/c Dr. | 3,200 | |||
| To Capital Reserve A/c | 3,200 | |||
| (Balance of the 1,000 reissued shares in Share Forfeiture Account transferred to Capital Reserve) |
Working Notes: Ramu applied for 40,000 ÷ 30,000 × 1,200 = 1,600 shares; excess application money = ₹1,200; allotment shortfall = 4,800 − 1,200 = ₹3,600. Shamu was allotted 20,000 ÷ 35,000 × 700 = 400 shares. Of the 1,000 reissued shares, 600 came from Ramu’s forfeited shares and 400 (all) from Shamu’s. Capital Reserve on Ramu’s 600 reissued shares = (4,800 ÷ 1,200 − discount ₹2) × 600 = ₹1,200. Capital Reserve on Shamu’s 400 reissued shares = (2,800 ÷ 400 − discount ₹2) × 400 = ₹2,000. Total = 1,200 + 2,000 = ₹3,200.
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.110 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
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