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Question 46 Chapter 8 of +2-Part-1 – USHA Publication 12 Class Part – 1

Q-46 - CH-8 - Usha +2 Book 2018 - Solution
Q-46 - CH-8 - Usha +2 Book 2018 - Solution

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Question 46 Chapter 8 of +2-Part-1 – USHA

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46. (Issue at Premium/Prorata Allotment/Forfeiture) PCS Ltd. issued a prospectus inviting application for 20,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
on application Rs. 5 (including premium)
on allotment Rs.4
on call Rs. 3
Applications were received for 30,000 shares and allotment was made Prorata to applicant. for 24.000 shares. Excess money paid on application for these shares was utilised towards payment of allotment money. Vishal who applied for 600 shares failed to pay the allotment money and on his subsequent failure to pay the call, his shares were forfeited .Pass the necessary entries in the books of PCS Ltd.

The solution of Question 46 Chapter 8 of +2 Part-1 – USHA

Journal

Date  Particulars
L.F.DebitCredit
A)Bank A/cDr. 1,50,000 
 To Share Application A/c   1,50,000
 (Being the receipt of application money)    
      
B) Share Application A/cDr. 1,50,000 
 To Share capital A/c  60,000
 To Security Premium Reserve A/c  40,000
 To Share allotment A/c  30,000
 To Bank A/c  20,000
 (Being 20,000 shares allotted )    
      
C)Share allotment Call A/cDr. 80,000 
 To Share capital A/c  80,000
 (Being amount due on allotment)    
     
D)Bank A/cDr. 58,200 
 Calls in arrears A/cDr. 1,800 
 To Share allotment A/c  60,000
 (Being amount received on allotment)   
     
E)Share Call A/cDr. 60,000 
 To Share capital A/c  60,000
 (Being amount due on first call)   
     
F)Share Fortified A/cDr. 720 
 To Capital Reserve A/c  720
 (Being balance in share fortified transferred to capital reserve)   
     
G)Bank A/cDr. 58,200 
 Calls in arrears A/cDr. 1,800 
 To Share allotment A/c  60,000
 (Being amount received on call)   
     
H)Share capital A/cDr. 6,000 
 To Share Forfeited A/c  2,400
 To Calls in Arrears A/c  3,600
 (Being 600 shares fortified)   

Working Notes :

Shares applied = 24,000/20,000 X 600 = 720 shares   
    
Excess app. money retained for allotment   
(720 X 5) – (600X5) = Rs. 600   
    
Allotment not received on 600 shares   
600 X 4  2,400
Less : Retained  600
Not received  1,800
Allotment received:   
Total amount due  80,000
Less : Already received20,000  
Less : not received1,800 21,800
   58,200
Amount credited to share forfeited A/c   
Received on application : 720 X 5  3,600
Less : Adjustment on premium :600 X 2  1,200
   2,400

Note: Premium received Rs. 1,200 can’t be forfeited

This is all about the Question 46 Chapter 8 of +2-Part-1 – USHA

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Forfeiture of shares – Its accounting Entries

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Forfeiture of shares – Its accounting Entries – In Hindi

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