T.S. Grewal Class 12 Vol 2 Chapter 1 Q.51 - Share Capital

Question 51

Sangita Limited invited applications for 60,000 shares of ₹10 each at par, payable: On Application ₹2; On Allotment ₹3; On First and Final Call ₹5. Applications were received for 92,000 shares. Allotment was made as follows: (a) applicants for 40,000 shares: in full; (b) applicants for 50,000 shares: 40%; (c) applicants for 2,000 shares: nil. ₹1,08,000 was realised on allotment (excluding the amount carried from application money), and ₹2,50,000 on call. The directors decided to forfeit the shares of those applicants to whom full allotment was made and whose allotment money was overdue. Pass the Journal entries. (CBSE Sample Paper 2013)

Solution

JOURNAL (Books of Sangita Limited)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		1,84,000
	To Share Application A/c			1,84,000
	(Application money received on 92,000 shares @ ₹2)
	Share Application A/c    Dr.		1,84,000
	To Share Capital A/c			1,20,000
	To Share Allotment A/c			60,000
	To Bank A/c			4,000
	(Application money for 60,000 allotted shares transferred to Share Capital; the excess from Category (b) adjusted against Allotment; Category (c)’s applications refunded)
	Share Allotment A/c (60,000 × ₹3)    Dr.		1,80,000
	To Share Capital A/c			1,80,000
	Bank A/c    Dr.		1,08,000
	To Share Allotment A/c			1,08,000
	(Allotment money received, net of the amount already adjusted from application)
	Share Capital A/c (4,000 × ₹10)    Dr.		40,000
	To Share Allotment A/c (4,000 × ₹3)			12,000
	To Share First and Final Call A/c (4,000 × ₹5)			20,000
	To Share Forfeited A/c			8,000
	(4,000 shares of the full-allotment category forfeited for non-payment of allotment and call money)

Working Notes: Category (b) (50,000 applied, 20,000 allotted) had an excess of ₹60,000 on application, fully adjusted against Allotment. Allotment due on 60,000 shares (₹1,80,000) less this ₹60,000 adjustment = ₹1,20,000 still due; only ₹1,08,000 was received, leaving ₹12,000 in arrears, i.e. on 12,000 ÷ 3 = 4,000 shares (all from the full-allotment Category (a), per the directors’ decision).