T.S. Grewal Class 12 Vol 2 Chapter 1 Q.97 - Share Capital

Question 97

Abhipra 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 ₹14 per share (including premium of ₹10), on Allotment ₹8 per share (including premium of ₹5), on First and Final Call ₹8 per share (including premium of ₹5). Applications for 90,000 shares were received. Paresh, a shareholder holding 5,000 shares, did not pay the allotment money and call, while Dharam, holder of 3,000 shares, did not pay the call. Shares of Paresh and Dharam were forfeited. Of the forfeited shares, 5,000 shares, including 3,000 shares of Paresh and 2,000 shares of Dharam, were reissued to Parul at ₹8 per share, fully paid-up. Pass the necessary Journal entries for the above transactions in the books of Abhipra Ltd.

Solution

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c (90,000 × ₹14)    Dr.		12,60,000
	To Share Application A/c			12,60,000
	(Application money received on 90,000 shares)
	Share Application A/c    Dr.		12,60,000
	To Share Capital A/c (90,000 × ₹4)			3,60,000
	To Securities Premium Reserve A/c (90,000 × ₹10)			9,00,000
	(Application money transferred to Share Capital and Securities Premium Reserve)
	Share Allotment A/c (90,000 × ₹8)    Dr.		7,20,000
	To Share Capital A/c (90,000 × ₹3)			2,70,000
	To Securities Premium Reserve A/c (90,000 × ₹5)			4,50,000
	(Allotment due on 90,000 shares)
	Bank A/c (85,000 × ₹8)    Dr.		6,80,000
	To Share Allotment A/c			6,80,000
	(Allotment received on 85,000 shares; Paresh’s 5,000 shares in arrears)
	Share First and Final Call A/c (90,000 × ₹8)    Dr.		7,20,000
	To Share Capital A/c (90,000 × ₹3)			2,70,000
	To Securities Premium Reserve A/c (90,000 × ₹5)			4,50,000
	(First and final call due on 90,000 shares)
	Bank A/c [(90,000 − 8,000) × ₹8]    Dr.		6,56,000
	To Share First and Final Call A/c			6,56,000
	(First and final call received, except on Paresh’s 5,000 and Dharam’s 3,000 shares)
	Share Capital A/c (8,000 × ₹10)    Dr.		80,000
	Securities Premium Reserve A/c (5,000 × ₹10 + 3,000 × ₹5)    Dr.		65,000
	To Forfeited Shares A/c (5,000 × ₹4 + 3,000 × ₹7)			41,000
	To Share Allotment A/c			40,000
	To Share First and Final Call A/c			64,000
	(Paresh’s 5,000 shares forfeited for non-payment of allotment and the first and final call; Dharam’s 3,000 shares forfeited for non-payment of the first and final call)
	Bank A/c (5,000 × ₹8)    Dr.		40,000
	Forfeited Shares A/c (5,000 × ₹2)    Dr.		10,000
	To Share Capital A/c (5,000 × ₹10)			50,000
	(5,000 forfeited shares reissued to Parul at ₹8 per share, fully paid-up)
	Forfeited Shares A/c    Dr.		16,000
	To Capital Reserve A/c			16,000
	(Forfeited amount on the 5,000 reissued shares transferred to Capital Reserve)

Working Notes:

Forfeited amount of Paresh’s 3,000 reissued shares = 20,000 ÷ 5,000 × 3,000 = ₹12,000.
Forfeited amount of Dharam’s 2,000 reissued shares = 21,000 ÷ 3,000 × 2,000 = ₹14,000.
Total forfeited amount on reissued shares = 12,000 + 14,000 = ₹26,000.
Amount transferred to Capital Reserve = Total forfeited amount − discount on reissue = 26,000 − 10,000 = ₹16,000.