Question 45 Chapter 8 of +2-Part-1
45. (Prorata Allotment/Forfeiture/Reissue) Bharatiya Textile Co. Ltd. issued its prospectus on 1st January 2016 inviting applications for 10,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as under:
Rs. 2 on application
Rs. 6 on allotment (including premium)
Rs. 2 on first call
Rs. 2 on final call.
Applications for 15,000 shares were received. Applications for 2,500 shares were not allotted any share and their application money was refunded. The remaining applicants were allotted 10,000 shares pro-rata and money over-paid on application was used towards payment on allotment. All calls having been made, money was realised from all shareholders except one who was allotted 100 shares and who failed to pay two calls. His shares were, therefore forfeited by the directors and were later re-issued as fully paid at a price of Rs. 8 per share. Give journal entries in the books of the company
The solution of Question 45 Chapter 8 of +2 Part-1: –
| Applied | Allotted | |
| Refund | 2,500 | |
| Pro rate | 12,500 | 10,000 |
| 15,000 | 10,000 |
| 1. Allotment amount to be received |
|
| Total amount required ( 10,000X6) | 60,000 |
| Less : surplus app. Amount , adjusted towards allotment (12,500-10,000)X2) | 500 |
| 55,000 | |
| 2. Allotment credited to capital reserve A/c | |
| Received on 100 shares (app. Money – allotment money –share premium )=(2+6-2) =6X100 | 600 |
| Less : utilized on reissue (10-8)= 2X100 | 200 |
| 400 |
| Journal |
|||||
| Date | Particulars |
L.F. | Debit | Credit | |
| A) | Bank A/c( 15000 X 2) | Dr. | 30,000 | ||
| To Share Application A/c | 30,000 | ||||
| (Being application money received) | |||||
| B) | Share Application A/c | Dr. | 30,000 | ||
| To Share capital A/c (10,000 X 2) | 20,000 | ||||
| To Share allotment A/c (2,500 X 2) | 5,000 | ||||
| To Bank A/c (2,500 X 2) | 5,000 | ||||
| (Being pro-rata allotment made ) | |||||
| C) | Share allotment A/c (10,000 X 6) | Dr. | 60,000 | ||
| To Share capital A/c(10,000 X 4) | 40,000 | ||||
| To Securities Premium Reserve A/c (10,000 X 2) | 20,000 | ||||
| (Being allotment due) | |||||
| D) | Bank A/c (60,000-5,000) | Dr. | 55,000 | ||
| To Share allotment A/c | 55,000 | ||||
| (Being allotment received) | |||||
| E) | Share first Call A/c (10,000 X 2) | Dr. | 20,000 | ||
| To Share capital A/c | 20,000 | ||||
| (Being first call due) | |||||
| F) | Bank A/c (900 X 2) | Dr. | 19,800 | ||
| Calls in arrears A/c | Dr. | 200 | |||
| To Share first call A/c | 20,000 | ||||
| (Being first call received) | |||||
| G) | Share second & final Call A/c (10,000 X 2) | Dr. | 20,000 | ||
| To Share capital A/c | 20,000 | ||||
| (Being final call due) | |||||
| H) | Bank A/c (9,900 X 2) | Dr. | 19,800 | ||
| Calls in arrears A/c (100 X 2) | Dr. | 200 | |||
| To Share second & final Call A/c | 20,000 | ||||
| (Being final call received) | |||||
| I) | Share capital A/c (100X10) | Dr. | 1,000 | ||
| To Share Forfeited A/c (100X6) | 600 | ||||
| To Calls in Arrears A/c (100X4) | 400 | ||||
| (Being 100 shares fortified) | |||||
| J) | Bank A/c (100X8) | Dr. | 800 | ||
| Share Fortified A/c (100X2) | Dr. | 200 | |||
| To Share capital A/c (100X10) | 1,000 | ||||
| (Being 100 shares reissued) | |||||
| K) | Share Fortified A/c (600-200) | Dr. | 400 | ||
| To Capital Reserve A/c | 400 | ||||
| (Being balance transferred to capital resource) | |||||
It all about Question 45 Chapter 8 of +2-Part-1, If you have any problem please comment below.
Forfeiture of shares – Its accounting Entries
End of Solution
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Chapter No. 8 – Company Accounts (Share Capital)
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Chapter No. 9 – Company Accounts (Issue of Debentures)
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