T.S. Grewal Class 12 Vol 2 Chapter 1 Q.96 - Share Capital

Question 96

Sukanya Ltd. invited applications for issuing 1,00,000 equity shares of ₹10 each. The shares were issued at a premium of ₹20 per share. The amount was payable as follows: on Application and Allotment ₹14 per share (including premium of ₹10), on First Call ₹8 per share (including premium of ₹5), on Final Call ₹8 per share (including premium of ₹5). Applications for 96,000 shares were received. Rohit, a shareholder holding 7,000 shares, failed to pay both the calls, and Namit, a holder of 5,000 shares, did not pay the final call. Shares of Rohit and Namit were forfeited. Of the forfeited shares, 8,000 shares, including all the shares of Rohit, were reissued to Reena at ₹8 per share, fully paid-up. Pass the necessary Journal entries for the above transactions in the books of Sukanya Ltd. (CBSE 2016 C)

Solution

JOURNAL (Books of Sukanya Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c (96,000 × ₹14)    Dr.		13,44,000
	To Equity Share Application and Allotment A/c			13,44,000
	(Application and allotment money received on 96,000 shares)
	Equity Share Application and Allotment A/c    Dr.		13,44,000
	To Equity Share Capital A/c (96,000 × ₹4)			3,84,000
	To Securities Premium Reserve A/c (96,000 × ₹10)			9,60,000
	(Application and allotment money adjusted to Share Capital and Securities Premium)
	Equity Share First Call A/c (96,000 × ₹8)    Dr.		7,68,000
	To Equity Share Capital A/c (96,000 × ₹3)			2,88,000
	To Securities Premium Reserve A/c (96,000 × ₹5)			4,80,000
	(First call money due)
	Bank A/c (7,68,000 − 56,000)    Dr.		7,12,000
	To Equity Share First Call A/c			7,12,000
	(First call money received, except on Rohit’s 7,000 shares)
	Equity Share Second Call A/c (96,000 × ₹8)    Dr.		7,68,000
	To Equity Share Capital A/c (96,000 × ₹3)			2,88,000
	To Securities Premium Reserve A/c (96,000 × ₹5)			4,80,000
	(Second and final call money due)
	Bank A/c (7,68,000 − 56,000 − 40,000)    Dr.		6,72,000
	To Equity Share Second Call A/c			6,72,000
	(Second call money received, except on Rohit’s 7,000 and Namit’s 5,000 shares)
	Equity Share Capital A/c    Dr.		1,20,000
	Securities Premium Reserve A/c (7,000 × ₹10 + 5,000 × ₹5)    Dr.		95,000
	To Equity Share First Call A/c			56,000
	To Equity Share Second Call A/c			96,000
	To Shares Forfeited A/c (7,000 × ₹4 + 5,000 × ₹7)			63,000
	(Rohit’s 7,000 shares and Namit’s 5,000 shares forfeited)
	Bank A/c (8,000 × ₹8)    Dr.		64,000
	Shares Forfeited A/c (8,000 × ₹2)    Dr.		16,000
	To Equity Share Capital A/c			80,000
	(8,000 shares, including all of Rohit’s, reissued to Reena at ₹8 per share, fully paid-up)
	Shares Forfeited A/c    Dr.		19,000
	To Capital Reserve A/c			19,000
	(Balance in Shares Forfeited Account of the reissued shares transferred to Capital Reserve)

Working Note: Amount transferred to Capital Reserve

Amount forfeited on the reissued shares of Rohit (all 7,000 reissued) = ₹28,000.
Amount forfeited on the reissued shares of Namit = 35,000 × 1,000 ÷ 5,000 = ₹7,000 (only 1,000 of his 5,000 shares reissued).
Total amount forfeited on reissued shares = 28,000 + 7,000 = ₹35,000.
Amount transferred to Capital Reserve = 35,000 − 16,000 (discount on reissue) = ₹19,000.