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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Max Ltd. invited applications for 2,00,000 Equity Shares of ₹10 each, to be issued at a 20% premium. The money payable per share was: on application ₹5, on allotment ₹4 (including premium of ₹2), first call ₹2, and final call ₹1. Applications were received for 2,40,000 shares, and allotment was made as: (i) to applicants for 1,00,000 shares, in full; (ii) to applicants for 80,000 shares, 60,000 shares; (iii) to applicants for 60,000 shares, 40,000 shares. Applicants of 1,000 shares falling in Category (i), and applicants of 1,200 shares falling in Category (ii), failed to pay allotment money. These shares were forfeited on failure to pay the first call. Holders of 1,200 shares falling in Category (iii) failed to pay the first and final call, and these shares were forfeited after the final call. 1,300 shares (1,000 of Category (i) and 300 of Category (ii)) were reissued at ₹8 per share, as fully paid-up. Journalise the above transactions. Prepare the Cash Book and Balance Sheet.
Application ₹5, Allotment ₹4 (₹2 + ₹2 premium), First Call ₹2, Final Call ₹1 — total ₹12 (₹10 + ₹2 premium).
CASH BOOK
| Dr. Particulars | ₹ |
|---|---|
| Equity Share Application (2,40,000 × ₹5) | 12,00,000 |
| Equity Share Allotment | 5,93,900 |
| Equity Share First Call | 3,93,800 |
| Equity Share Final Call (1,96,900 × ₹1) | 1,96,900 |
| Equity Share Capital (reissue, 1,000 shares of Category (i)) | 8,000 |
| Equity Share Capital (reissue, 300 shares of Category (ii)) | 2,400 |
| Total | 23,95,000 |
| Cr. Particulars | ₹ |
| Balance c/d | 23,95,000 |
JOURNAL (Books of Max Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Equity Share Application A/c Dr. | 12,00,000 | |||
| To Equity Share Capital A/c | 10,00,000 | |||
| To Equity Share Allotment A/c | 2,00,000 | |||
| (Application money of 2,00,000 shares transferred to Share Capital; ₹2,00,000 excess adjusted against Allotment) | ||||
| Equity Share Allotment A/c Dr. | 8,00,000 | |||
| To Equity Share Capital A/c | 4,00,000 | |||
| To Securities Premium Reserve A/c | 4,00,000 | |||
| (Allotment due on 2,00,000 shares at ₹4 each, including ₹2 premium) | ||||
| Equity Share First Call A/c Dr. | 4,00,000 | |||
| To Equity Share Capital A/c | 4,00,000 | |||
| (First call due on 2,00,000 shares at ₹2 each) | ||||
| Equity Share Capital A/c (1,000 × ₹9) Dr. | 9,000 | |||
| Securities Premium Reserve A/c (1,000 × ₹2) Dr. | 2,000 | |||
| To Share Forfeiture A/c (1,000 × ₹5) | 5,000 | |||
| To Equity Share Allotment A/c (1,000 × ₹4) | 4,000 | |||
| To Equity Share First Call A/c (1,000 × ₹2) | 2,000 | |||
| (1,000 shares of Category (i), ₹9 called-up, forfeited for non-payment of allotment and the first call) | ||||
| Equity Share Capital A/c Dr. | 8,100 | |||
| Securities Premium Reserve A/c Dr. | 1,800 | |||
| To Share Forfeiture A/c | 6,000 | |||
| To Equity Share Allotment A/c | 2,100 | |||
| To Equity Share First Call A/c | 1,800 | |||
| (900 shares of Category (ii) forfeited for non-payment of allotment and the first call) | ||||
| Equity Share Final Call A/c (1,98,100 × ₹1) Dr. | 1,98,100 | |||
| To Equity Share Capital A/c | 1,98,100 | |||
| (Final call due on 1,98,100 shares at ₹1 each) | ||||
| Equity Share Capital A/c (1,200 × ₹10) Dr. | 12,000 | |||
| To Share Forfeiture A/c | 8,400 | |||
| To Equity Share First Call A/c | 2,400 | |||
| To Equity Share Final Call A/c | 1,200 | |||
| (1,200 shares of Category (iii) forfeited for non-payment of the first and final call) | ||||
| Bank A/c (1,000 × ₹8) Dr. | 8,000 | |||
| Share Forfeiture A/c (1,000 × ₹2) Dr. | 2,000 | |||
| To Equity Share Capital A/c (1,000 × ₹10) | 10,000 | |||
| (1,000 shares of Category (i) reissued at ₹8 per share, fully paid-up) | ||||
| Bank A/c (300 × ₹8) Dr. | 2,400 | |||
| Share Forfeiture A/c (300 × ₹2) Dr. | 600 | |||
| To Equity Share Capital A/c (300 × ₹10) | 3,000 | |||
| (300 shares of Category (ii) reissued at ₹8 per share, fully paid-up) | ||||
| Share Forfeiture A/c Dr. | 4,400 | |||
| To Capital Reserve A/c | 4,400 | |||
| (Balance in Share Forfeiture Account of the 1,300 reissued shares transferred to Capital Reserve) |
As per Schedule III of the Companies Act, 2013, the Balance Sheet is presented as follows:
Max Ltd. Balance Sheet
| Particulars | Note No. | ₹ |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| a. Share Capital | 1 | 19,94,400 |
| b. Reserves and Surplus | 2 | 4,00,600 |
| Total | 23,95,000 | |
| II. Assets | ||
| 2. Current Assets | ||
| a. Cash and Cash Equivalents | 3 | 23,95,000 |
| Total | 23,95,000 |
NOTES TO ACCOUNTS
| Note No. | Particulars | ₹ |
|---|---|---|
| 1 | Share Capital | |
| Issued: 2,00,000 Equity Shares of ₹10 each | 20,00,000 | |
| Subscribed, Called-up and Paid-up: 1,98,200 Equity Shares of ₹10 each | 19,82,000 | |
| Add: Shares Forfeited (600 shares × ₹6.67) | 4,000 | |
| Add: Shares Forfeited (1,200 shares × ₹7) | 8,400 | |
| Total | 19,94,400 | |
| 2 | Reserves and Surplus | |
| Securities Premium | 3,96,200 | |
| Capital Reserve | 4,400 | |
| Total | 4,00,600 | |
| 3 | Cash and Cash Equivalents — Cash at Bank | 23,95,000 |
Working Notes: Category (ii) allottee count = 60,000 ÷ 80,000 × 1,200 = 900 shares; excess application money = ₹1,500; allotment shortfall = 3,600 − 1,500 = ₹2,100. Category (i) and (ii) forfeitures use the called-up rate ₹9/share (application ₹5 + allotment face ₹2 + first call ₹2), since these shares had not yet reached the final call stage. Category (iii) fully paid application and allotment, only defaulting on both calls, hence called-up ₹10/share (full face value) with no premium reversal needed. Capital Reserve: Category (i) — ₹5,000 credit − ₹2,000 discount = ₹3,000 (all 1,000 shares reissued); Category (ii) — (6,000 ÷ 900 − ₹2 discount) × 300 = ₹1,400; total = ₹4,400.
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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