T.S. Grewal Class 12 Vol 2 Chapter 1 Q.53 - Share Capital

Question 53

Chand Ltd. invited applications for 1,00,000 equity shares of ₹10 each at a premium of ₹2 per share, payable: ₹4 (including premium) on application, ₹5 on allotment, and the balance on first and final call. Applications were received for 1,80,000 shares, of which applications for 30,000 shares were rejected and the remaining applicants were allotted shares on a pro-rata basis. Mansi, holding 5,000 shares, failed to pay the first and final call money, and her shares were forfeited. Pass the necessary Journal entries. (CBSE 2024)

Solution

Payment schedule: Application ₹4 (₹2 face + ₹2 premium); Allotment ₹5; First and Final Call ₹3 (total ₹10 face + ₹2 premium).

JOURNAL (Books of Chand Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		7,20,000
	To Share Application A/c			7,20,000
	(Application money received on 1,80,000 shares @ ₹4)
	Share Application A/c    Dr.		7,20,000
	To Share Capital A/c (1,00,000 × ₹2)			2,00,000
	To Securities Premium Reserve A/c			2,00,000
	To Share Allotment A/c			2,00,000
	To Bank A/c (30,000 × ₹4)			1,20,000
	(Application money for 1,00,000 shares transferred to Share Capital and Securities Premium; excess from the pro-rata group adjusted against Allotment; rejected applications refunded)
	Share Allotment A/c    Dr.		5,00,000
	To Share Capital A/c			5,00,000
	Bank A/c    Dr.		3,00,000
	To Share Allotment A/c			3,00,000
	Share First and Final Call A/c    Dr.		3,00,000
	To Share Capital A/c			3,00,000
	Bank A/c    Dr.		2,85,000
	To Share First and Final Call A/c			2,85,000
	(Call received except from Mansi, holding 5,000 shares)
	Share Capital A/c (5,000 × ₹10)    Dr.		50,000
	To Share Forfeited A/c			35,000
	To Share First and Final Call A/c			15,000
	(5,000 shares forfeited for non-payment of the first and final call; the ₹2 premium per share already received on application is unaffected and remains in Securities Premium Reserve)