Question 38 Chapter 8 of +2-Part-1 – USHA Publication 12 Class Part – 1

Q-38- CH-8 - Usha +2 Book 2018 - Solution-min

Question 38 Chapter 8 of +2-Part-1

38. (Forfeiture/Reissue) Prince Industries Ltd. has an authorised capital of Rs. 50,00,000 divided into 5,00,000 equity shares of Rs. 10 each. It invited applications for 1,00,000 shares of Rs. 10 each at a premium of Rs. 3 per share, payable as under:
Rs. 2 On application
Rs. 5 On allotment (including premium)
Rs. 4On first call and
Rs. 2On final call.
Applications were received for 1,50,000 shares. The application money on 30,000 shares was refunded. Whole of the shares were allotted to the applicants for 1.20,000 shares excess application money being adjusted towards allotment. X the holder of 200 shares failed to pay the first call money and his shares were forfeited. Y the holder of 300 shares, failed to pay both the calls and his shares were also forfeited after the final call was made. All the forfeited shares were reissued to Z credited as fully paid for RS. 9 per share. Show the necessary journal entries and cash book entries to record the above transactions and draw up the balance sheet of the company.

The solution of Question 38 Chapter 8 of +2 Part-1: –

Journal
Date   Particulars
L.F. Debit Credit
A) Equity Share Application A/c (1,00,000 X 2) Dr.   2,00,000  
  To Equity Share capital A/c       2,00,000
  (Being the transfer of application money on 1,00,000 shares @ Rs. 2 per share )        
           
B)  Equity Share Application A/c Dr.   40,000  
  To Equity Share Allotment A/c     40,000
  (Being the excess application money Adjusted )        
           
C) Equity Share Allotment A/c (40,000 X 2) Dr.   5,00,000  
  To Equity Share capital A/c     2,00,000
  To Security Premium A/c     3,00,000
  (Being allotment money due on allotment of 1,00,000 shares @ Rs. 5 each including premium @ Rs. 3 per share )        
         
D) Equity Share first Call A/c (1,00,000 X 4) Dr.   4,00,000  
  To Equity Share capital A/c     4,00,000
  (Being amount due on first call of 1,00,000 share @ Rs.4 per share )      
         
E) Equity Share capital A/c ( 200 X 8) Dr.   1,600  
  To Equity Share Forfeited A/c ( 200 X 4)     800
  To Equity Share first call A/c ( 200 X 4)     800
  (Being forfeitures of 200 shares of Rs. 10 Rs. 8 called up on A/c for non payment of the first call of Rs. 4 each )      
         
F) Equity Share final Call A/c (99,800 X 2) Dr.   1,99,600  
  To Equity Share capital A/c     1,99,600
  (Being amount due on final call of 99,800 share @ Rs.2 per share)      
         
G) Equity Share final Call A/c (99,800 X 2) Dr. Dr.   3,000  
  To Equity Share Forfeited A/c ( 300 X 4)     1,200
  To Equity Share first call A/c ( 300 X 4)     1,200
  To Equity Share final call A/c ( 300 X 2)     600
  (Being forfeitures of 300 shares of Rs. 10 each fully called up on A/c for non payment of the first call of Rs. 4 each & Second Call Rs. 2 each)      
         
H) Share Fortified A/c Dr.   500  
  To Equity Share capital A/c     500
  (Being loss of the 500 shares reissued)      
         
I) Share Fortified A/c Dr.   1,500  
  To Capital Reserve A/c     1,500
  (Being balance in share fortified transferred to capital reserve)      

Cash Book (Bank Column Only): –

Particulars
Rs. Particulars Rs.
To Equity Share Application A/c 3,00,000 By Equity Share Application A/c 60,000
(On 1,50,000 shares @ Rs. 2 each)   (On 30,000 shares @ Rs. 2 each)  
To Equity Share Allotment A/c 4,60,000 By Balance c/d 13,01,500
(On 1,00,000 shares @ Rs. 5 each less Rs. 40,000 received in advance of app.)      
To Equity Share First call A/c 3,98,000    
(On 99,500 shares @ Rs. 4 each)      
To Equity Share First call A/c 1,99,000    
(On 99,500 shares @ Rs. 2 each)      
To Equity Share Capital A/c 4,500    
(On 500 shares @ Rs. 3 each)      
  13,61,500   13,61,500

Prince Industries Ltd. Balance Sheet: –

Date   Particulars
Note no/. FIG. RELATING TO CURRENT REPORTNG PERIOD FIG. RELATING TO PREVIOUS REPORTNG PERIOD
i) Equity & Liability      
  Shareholders fund      
  Share Capital 1 10,00,000  
  Reserve & Surplus      
  Non current Liabilities      
  Current Liabilities 2 3,01,500  
  Total   13,01,500  
         
ii) Assets      
  Non -Current Assets      
  Cash & Cash equivalent      
  Cash at bank 3 13,01,500  
  Total   13,01,500  

Note 1: Shared capital

Particulars
Current year Previous year
Authorized capital    
(5,00,000 shares of Rs. 10 each) 50,00,000  
Issued , subscribed , called & paid up Capital    
(1,00,000 shares of Rs. 10 each fully paid & called up) 10,00,000  
Total 10,00,000  

Note 2: Reserve & surplus

Particulars
Current year Previous year
Secruity premium 3,00,000  
Capital Reserve 1,500  
Total 3,01,000  

Note 3: Cash & Cash Equivalent

Particulars
Current year Previous year
Cash At Bank 13,01,500  
Total 3,01,000  

It all about Question 38 Chapter 8 of +2-Part-1, If you have any problem please comment below.

Forfeiture of shares – Its accounting Entries

You can also Check out the solved question of other Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 38 Chapter 8 of +2-Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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