T.S. Grewal Class 12 Vol 2 Chapter 1 Q.24 - Share Capital

Question 24

Sony Media Ltd. issued 50,000 shares of ₹10 each, payable ₹3 on application, ₹4 on allotment, and the balance on first and final call. Applications were received for 1,00,000 shares, and allotment was made as follows: (i) applicants for 60,000 shares were allotted 30,000 shares; (ii) applicants for 40,000 shares were allotted 20,000 shares. Anupam, to whom 1,000 shares were allotted from category (i), failed to pay the allotment money. Pass Journal entries up to allotment.

Solution

JOURNAL (Books of Sony Media Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c (1,00,000 × ₹3)    Dr.		3,00,000
	To Share Application A/c			3,00,000
	(Application money received on 1,00,000 shares)
	Share Application A/c    Dr.		3,00,000
	To Share Capital A/c (50,000 × ₹3)			1,50,000
	To Share Allotment A/c			1,50,000
	(Application money for allotted shares transferred to Share Capital; the entire excess adjusted against Allotment)
	Share Allotment A/c (50,000 × ₹4)    Dr.		2,00,000
	To Share Capital A/c			2,00,000
	(Allotment due on 50,000 shares)
	Bank A/c (WN)    Dr.		49,000
	To Share Allotment A/c			49,000
	(Allotment money received, net of excess application money already adjusted and Anupam’s shortfall)

Working Notes: Allotment due (50,000 × ₹4) = ₹2,00,000. Less: excess application money already adjusted (₹1,50,000) = ₹50,000. Less: amount due but not received on Anupam’s shares = ₹1,000. Net received = ₹49,000.

Anupam’s case: he was allotted 1,000 shares from category (i), where the ratio is 30,000 allotted : 60,000 applied = 1 : 2, so he had applied for 2,000 shares. His application money = 2,000 × ₹3 = ₹6,000; the amount transferred to Share Capital for his 1,000 allotted shares = 1,000 × ₹3 = ₹3,000; his excess application money = ₹3,000. His allotment due = 1,000 × ₹4 = ₹4,000, less his ₹3,000 excess = ₹1,000 still owed, which he failed to pay.