Question 41 Chapter 8 of +2-Part-1 – USHA Publication 12 Class Part – 1

Question 41 Chapter 8 of +2-Part-1

41. (Prorata Allotment/Call in Arrears) Metallic Ltd. invited applications for 40,000 equity shares of Rs. 50 each issued at a premium of Rs. 10 per share. The amount was payable as follows :
On application and allotment Rs. 20 per share. Balance (including premium) – on first and final call:
Applications for 70,000 shares were received. Applications for 20,000 shares were rejected and pro-rata allotment was made to the remaining applicants. First and final call was made and duly received except on 400 shares allotted to Nitesh. Journalise the above transactions.

The solution of Question 41 Chapter 8 of +2 Part-1: –

Journal
Date	Particulars		L.F.	Debit	Credit
A)	Bank A/c (24,000 X 2)	Dr.		14,00,000
	To Equity Share Application A/c				14,00,000
	(Being the receipt of application money)
B)	Equity Share Application A/c	Dr.		14,00,000
	To Equity Share capital A/c				8,00,000
	To Equity Share final A/c				2,00,000
	To Bank A/c				4,00,000
	(Being 40,000 shares allotted on pro rata to 50,000 app. & 20,000 shares rejected )
C)	Equity Share final Call A/c	Dr.		16,00,000
	To Equity Share capital A/c				12,00,000
	To Securities Premium Reserve A/c				4,00,000
	(Being amount due on final call @ Rs. 40 including premium Rs. 10 )
D)	Bank A/c	Dr.		13,86,000
	Calls in arrears A/c	Dr.		14,000
	To Equity Share final Call A/c				14,00,000
	(Being amount received on final call of 400 share )
E)	Share capital A/c	Dr.		20,000
	Securities Premium Reserve A/c	Dr.		4,000
	To Share Forfeited A/c				10,000
	To Calls in Arrears A/c				14,000
	(Being 400 shares fortified)

Working Notes :

1.  Calculation of amount balanced for final call

Application Received	70,000
(-)Application Rejected	20,000
Application left for pro rata allotment	50,000
50,000 App. Were allotted 40,000 shares
Application money received (70,000 X 20)	14,00,000
Less : Refund to rejected Applicants (20,000 X 20)	4,00,000
	10,00,000
Less :Transferred to Share capital on 40,000 X 20	8,00,000
Retained for final call	2,00,000

2. Calculation of amount received on final call

Shares applied by Nitesh = (50,000/40,000)X 400 = 500 shares
Application & Allotment money Received (500X20)	10,000
Less : Adjusted to Cap. Retained (400X20)	8,000
	2,000
Total amount due in final call (400X40)	16,000
Less : Already received	2,000
	14,000
Total amount due in final call	16,00,000
Less : Already received	2,00,000
	14,00,000
Not received on final Call	14,000
Received on final Call	13,86,000

It all about Question 41 Chapter 8 of +2-Part-1, If you have any problem please comment below.

Forfeiture of shares – Its accounting Entries

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