T.S. Grewal Class 12 Vol 2 Chapter 1 Q.57 - Share Capital

Question 57

Vani Limited invited applications for 1,00,000 equity shares of ₹10 each at a premium of 10%, payable: On Application and Allotment ₹4 (including ₹1 premium); On First Call ₹4; On Second and Final Call ₹3. Applications for 1,50,000 shares were received, and pro-rata allotment was made to all applicants; excess application money was adjusted towards the calls. Parth, a shareholder who had applied for 600 shares, did not pay the first call; his shares were forfeited. The second and final call was not yet made. Half of the forfeited shares were reissued at ₹8 per share, fully paid-up. Journalise the transactions, opening Calls-in-Arrears and Calls-in-Advance Accounts where necessary. (CBSE 2023)

Solution

JOURNAL (Books of Vani Limited)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c (1,50,000 × ₹4)    Dr.		6,00,000
	To Share Application and Allotment A/c			6,00,000
	Share Application and Allotment A/c    Dr.		6,00,000
	To Share Capital A/c			4,00,000
	To Securities Premium Reserve A/c			1,00,000
	To Calls-in-Advance A/c			1,00,000
	(Application and allotment money for 1,00,000 shares transferred to Share Capital and Premium; the remaining excess carried forward as Calls-in-Advance)
	Share First Call A/c (1,00,000 × ₹4)    Dr.		4,00,000
	To Share Capital A/c			4,00,000
	Bank A/c    Dr.		2,99,200
	Calls-in-Advance A/c    Dr.		1,00,000
	Calls-in-Arrears A/c    Dr.		800
	To Share First Call A/c			4,00,000
	(First call received except on Parth’s 400 allotted shares)
	Share Capital A/c (400 × ₹7)    Dr.		2,800
	To Share Forfeited A/c			2,000
	To Calls-in-Arrears A/c			800
	(400 shares forfeited for non-payment of the first call)
	Bank A/c (200 × ₹8)    Dr.		1,600
	Share Forfeited A/c    Dr.		400
	To Share Capital A/c			2,000
	(Half, 200, of the forfeited shares reissued at ₹8, fully paid)
	Share Forfeited A/c    Dr.		600
	To Capital Reserve A/c			600
	(Balance of Share Forfeited A/c on the reissued shares transferred to Capital Reserve)

Working Notes: Parth applied for 600 shares and was allotted 400 (ratio 2 : 3). Forfeited amount on the 400 shares = ₹2,000. For the 200 reissued shares, proportionate forfeited amount = 2,000 × 200/400 = ₹1,000, less the ₹400 discount on reissue = ₹600 transferred to Capital Reserve.