T.S. Grewal Class 12 Vol 2 Chapter 1 Q.82 - Share Capital

Question 82

Software Ltd., a company with registered capital of ₹5,00,000 in shares of ₹10 each, issued 20,000 of such shares payable ₹2 on application, ₹4 on allotment, ₹2 on first call, and ₹2 on final call. All the money payable on allotment was received, but on the first call being made, one shareholder paid the entire balance on his holding of 300 shares, and five shareholders with a total holding of 1,000 shares did not pay their dues on the first call. These shares were forfeited for non-payment of first call money. The final call was made and all money due was received. Later, the forfeited shares were reissued at ₹6 per share, fully paid-up. Record the above in the company’s Journal and prepare the Balance Sheet.

Solution

JOURNAL (Books of Software Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		40,000
	To Share Application A/c			40,000
	(Application money received on 20,000 shares at ₹2 each)
	Share Application A/c    Dr.		40,000
	To Share Capital A/c			40,000
	(Application money transferred to Share Capital)
	Share Allotment A/c    Dr.		80,000
	To Share Capital A/c			80,000
	(Allotment due on 20,000 shares at ₹4 each)
	Bank A/c    Dr.		80,000
	To Share Allotment A/c			80,000
	(Allotment money received)
	Share First Call A/c    Dr.		40,000
	To Share Capital A/c			40,000
	(First call due on 20,000 shares at ₹2 each)
	Bank A/c    Dr.		38,600
	To Share First Call A/c			38,000
	To Share Final Call A/c			600
	(First call received on 19,000 shares, including one shareholder’s advance final call payment on his 300 shares; five shareholders holding 1,000 shares failed to pay)
	Share Capital A/c (1,000 × ₹8)    Dr.		8,000
	To Share Forfeiture A/c (1,000 × ₹6)			6,000
	To Share First Call A/c (1,000 × ₹2)			2,000
	(1,000 shares forfeited for non-payment of the first call)
	Share Final Call A/c    Dr.		38,000
	To Share Capital A/c			38,000
	(Final call due on 19,000 shares at ₹2 each)
	Bank A/c    Dr.		37,400
	To Share Final Call A/c			37,400
	(Final call received on the remaining 18,700 shares; 300 shares already settled via advance payment)
	Bank A/c (1,000 × ₹6)    Dr.		6,000
	Share Forfeiture A/c (1,000 × ₹4)    Dr.		4,000
	To Share Capital A/c (1,000 × ₹10)			10,000
	(1,000 forfeited shares reissued at ₹6 per share, fully paid-up)
	Share Forfeiture A/c    Dr.		2,000
	To Capital Reserve A/c			2,000
	(Balance in Share Forfeiture Account of the reissued shares transferred to Capital Reserve: 6,000 − 4,000 discount on reissue = 2,000)

Software Ltd. Balance Sheet

Particulars	Note No.	₹
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	2,00,000
b. Reserves and Surplus	2	2,000
Total		2,02,000
II. Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,02,000
Total		2,02,000

NOTES TO ACCOUNTS

Note No.	Particulars	₹
1	Share Capital
	Authorised: 50,000 shares of ₹10 each	5,00,000
	Issued: 20,000 shares of ₹10 each	2,00,000
	Subscribed, fully called-up and paid-up: 20,000 shares of ₹10 each	2,00,000
2	Reserves and Surplus — Capital Reserve	2,000
3	Cash and Cash Equivalents — Bank	2,02,000