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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
XYZ Ltd. issued a prospectus inviting applications for 2,000 shares of ₹10 each at a premium of ₹4 per share, payable: on application ₹6 (including ₹1 premium), on allotment ₹2 (including ₹1 premium), on first call ₹3 (including ₹1 premium), on second and final call ₹3 (including ₹1 premium). Applications were received for 3,000 shares, and pro-rata allotment was made on the applications for 2,400 shares (the remaining 600 shares’ applications being rejected outright). It was decided to utilise the excess application money towards the amount due on allotment. X, to whom 40 shares were allotted, failed to pay the allotment money, and on his subsequent failure to pay the first call, his shares were forfeited. Y, who applied for 72 shares, failed to pay the two calls, and on such failure, his shares were forfeited. Of the shares forfeited, 80 shares were sold to Z, credited as fully paid-up, for ₹9 per share, the whole of Y’s shares being included. Prepare the Journal, Cash Book, and the Balance Sheet.
Application ₹6 (₹5 + ₹1), Allotment ₹2 (₹1 + ₹1), First Call ₹3 (₹2 + ₹1), Final Call ₹3 (₹2 + ₹1) — total ₹14 (₹10 + ₹4 premium).
CASH BOOK
| Dr. Particulars | ₹ |
|---|---|
| Share Application (3,000 × ₹6) | 18,000 |
| Share Allotment | 1,568 |
| Share First Call | 5,700 |
| Share Final Call | 5,700 |
| Share Capital (reissue, 80 shares × ₹9) | 720 |
| Total | 31,688 |
| Cr. Particulars | ₹ |
| Share Application (600 shares refunded × ₹6) | 3,600 |
| Balance c/d | 28,088 |
| Total | 31,688 |
JOURNAL (Books of XYZ Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Share Application A/c Dr. | 14,400 | |||
| To Share Capital A/c (2,000 × ₹5) | 10,000 | |||
| To Securities Premium Reserve A/c (2,000 × ₹1) | 2,000 | |||
| To Share Allotment A/c | 2,400 | |||
| (Application money for 2,000 shares transferred to Share Capital and Securities Premium; ₹2,400 excess adjusted against Allotment) | ||||
| Share Allotment A/c Dr. | 4,000 | |||
| To Share Capital A/c | 2,000 | |||
| To Securities Premium Reserve A/c | 2,000 | |||
| (Allotment due on 2,000 shares at ₹2 each, including ₹1 premium) | ||||
| Bank A/c Dr. | 1,568 | |||
| To Share Allotment A/c | 1,568 | |||
| (Allotment received, net of the excess adjustment and X’s shortfall) | ||||
| Share First Call A/c Dr. | 6,000 | |||
| To Share Capital A/c | 4,000 | |||
| To Securities Premium Reserve A/c | 2,000 | |||
| (First call due on 2,000 shares at ₹3 each, including ₹1 premium) | ||||
| Share Capital A/c (40 × ₹8) Dr. | 320 | |||
| Securities Premium Reserve A/c Dr. | 72 | |||
| To Share Forfeiture A/c | 240 | |||
| To Share Allotment A/c | 32 | |||
| To Share First Call A/c | 120 | |||
| (X’s 40 shares, ₹8 called-up including premium, forfeited for non-payment of allotment and the first call) | ||||
| Share Final Call A/c (1,960 × ₹3) Dr. | 5,880 | |||
| To Share Capital A/c | 3,920 | |||
| To Securities Premium Reserve A/c | 1,960 | |||
| (Final call due on 1,960 shares at ₹3 each, including ₹1 premium) | ||||
| Share Capital A/c (60 × ₹10) Dr. | 600 | |||
| Securities Premium Reserve A/c Dr. | 120 | |||
| To Share Forfeiture A/c | 360 | |||
| To Share First Call A/c (60 × ₹3) | 180 | |||
| To Share Final Call A/c (60 × ₹3) | 180 | |||
| (Y’s 60 shares forfeited for non-payment of both calls) | ||||
| Bank A/c (80 × ₹9) Dr. | 720 | |||
| Share Forfeiture A/c (80 × ₹1) Dr. | 80 | |||
| To Share Capital A/c (80 × ₹10) | 800 | |||
| (80 shares — 20 of X’s and all 60 of Y’s — reissued to Z at ₹9 per share, fully paid-up) | ||||
| Share Forfeiture A/c Dr. | 400 | |||
| To Capital Reserve A/c | 400 | |||
| (Balance of the 80 reissued shares in Share Forfeiture Account transferred to Capital Reserve) |
As per Schedule III of the Companies Act, 2013, the Balance Sheet is presented as follows:
XYZ Ltd. Balance Sheet
| Particulars | Note No. | ₹ |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| a. Share Capital | 1 | 19,920 |
| b. Reserves and Surplus | 2 | 8,168 |
| Total | 28,088 | |
| II. Assets | ||
| 2. Current Assets | ||
| a. Cash and Cash Equivalents | 3 | 28,088 |
| Total | 28,088 |
NOTES TO ACCOUNTS
| Note No. | Particulars | ₹ |
|---|---|---|
| 1 | Share Capital | |
| Issued: 2,000 shares of ₹10 each | 20,000 | |
| Subscribed, Called-up and Paid-up: 1,980 shares of ₹10 each | 19,800 | |
| Add: Shares Forfeited (20 shares × ₹6) | 120 | |
| Total | 19,920 | |
| 2 | Reserves and Surplus | |
| Securities Premium | 7,768 | |
| Capital Reserve | 400 | |
| Total | 8,168 | |
| 3 | Cash and Cash Equivalents — Cash at Bank | 28,088 |
Working Notes:
1. X’s shares: applied for 2,400 ÷ 2,000 × 40 = 48 shares. Application money received (48 × ₹6) = ₹288; transferred to Share Capital (40 × ₹5) = ₹200; to Securities Premium (40 × ₹1) = ₹40; excess = ₹48. Share Capital due on allotment (40 × ₹1) = ₹40, fully covered by the excess, leaving ₹8 of the excess remaining. Securities Premium due on allotment (40 × ₹1) = ₹40, less the remaining ₹8 = ₹32 unpaid (the Calls-in-Arrears on Allotment).
2. Share Allotment: due (2,000 × ₹2) = ₹4,000, less excess application money ₹2,400 = ₹1,600, less X’s ₹32 shortfall = ₹1,568 received.
3. Y’s shares: allotted = 2,000 ÷ 2,400 × 72 = 60 shares.
4. Share First Call: due (2,000 × ₹3) = ₹6,000, less X’s shortfall (40 × ₹3 = ₹120) and Y’s shortfall (60 × ₹3 = ₹180) = ₹5,700 received.
5. Share Final Call: due (1,960 × ₹3) = ₹5,880, less Y’s shortfall (60 × ₹3 = ₹180) = ₹5,700 received.
Capital Reserve: X’s shares — forfeiture credit ₹240 (₹288 received less ₹40 and ₹8 premium already recognised), i.e. ₹6/share, less ₹1/share discount on reissue = ₹5/share × 20 reissued shares = ₹100. Y’s shares — forfeiture credit ₹360, i.e. ₹6/share, less ₹1/share discount = ₹5/share × 60 reissued shares = ₹300. Total = 100 + 300 = ₹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.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.113 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
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