Question 48 Chapter 8 of +2-Part-1
48 (Pro-rata Allotment/Forfeiture/Reissue) XY Limited invited applications for issuing 50,000 equity shares of Rs. 10 each. The amount wax payable as follows
On Application Rs. 3 per share
On Allotment Rs. 4 per share
On first and final call Rs. 3 per share
Applications were received for 75,000 shares and pro-rata allotment was made as follows: Applicants for 40,000 shares were allotted 30,000 shares on pro-rata basis. Applicants for
35,000 shares were allotted 20,000 shares on pro-rata basis Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 share failed to pay the allotment money His shares were forfeited immediately after allotment. Shamu who has applied for 700 shares out of the group applying for 35,000 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 1,000 shares were reissued @ rs. 8 per share fully paid up. The reissued shares included all the forfeited shares of Shamu. Pass the journal entries to record the above transactions .
The solution of Question 48 Chapter 8 of +2 Part-1: –
Journal
| Date | Particulars |
L.F. | Debit | Credit | |
| A) | Bank A/c( 75000 X 3) | Dr. | 2,25,000 | ||
| To Share Application A/c | 2,25,000 | ||||
| (Being the receipt of application money) | |||||
| B) | Share Application A/c | Dr. | 2,25,000 | ||
| To Share capital A/c (50,000 X 3) | 1,50,000 | ||||
| To Share allotment A/c | 75,000 | ||||
| (Being 50,000 shares allotted & excess app. Money transferred to allotment ) | |||||
| C) | Share allotment Call A/c | Dr. | 2,00,000 | ||
| To Share capital A/c | 2,00,000 | ||||
| (Being amount due on allotment ) | |||||
| D) | Bank A/c | Dr. | 1,21,400 | ||
| Calls in arrears A/c | Dr. | 3,600 | |||
| To Share allotment A/c | 1,25,000 | ||||
| (Being amount received on allotment ) | |||||
| E) | Share capital A/c | Dr. | 8,400 | ||
| To Share Forfeited A/c | 4,800 | ||||
| To Calls in Arrears A/c | 3,600 | ||||
| (Being 1,200 shares fortified) | |||||
| F) | Share final Call A/c | Dr. | 1,46,400 | ||
| To Share capital A/c | 1,46,400 | ||||
| (Being amount due on final call of 48,800 shares ) | |||||
| G) | Bank A/c | Dr. | 1,45,200 | ||
| Calls in arrears A/c | Dr. | 1,200 | |||
| To Share allotment A/c | 1,46,400 | ||||
| (Being amount received on allotment ) | |||||
| H) | Share capital A/c | Dr. | 4,000 | ||
| To Share Forfeited A/c | 2,800 | ||||
| To Calls in Arrears A/c | 1,200 | ||||
| (Being 1,200 shares fortified) | |||||
| I) | Bank A/c (1000X8) | Dr. | 8,000 | ||
| Share Fortified A/c | Dr. | 2,000 | |||
| To Share capital A/c | 10,000 | ||||
| (Being 1,000 shares reissued) | |||||
| J) | Share Fortified A/c | Dr. | 3,200 | ||
| To Capital Reserve A/c | 3,200 | ||||
| (Being balance in share fortified transferred to capital reserve) | |||||
Working Notes :
| S. No. | Shares Applied | Shares Allotted | Application money received | Application money adjusted | Excess Retained |
| 1 | 40,000 | 30,000 | 1,20,000 | 90,000 | 30,000 |
| 2 | 35,000 | 20,000 | 1,05,000 | 60,000 | 45,000 |
| 2,25,000 | 1,50,000 | 75,000 |
2 Shares applied by Ramu = 40,000/30,000 X 1,200 = 1,600 shares
| Application money received from Ramu 1600 X 3 | 4,800 | ||
| Less : Amount adjusted 1200 X 3 | 3,600 | ||
| Retained for allotment | 1,200 | ||
| Allotted due from Ramu 1200 X 4 | 4,800 | ||
| Less : already received | 1,200 | ||
| Not received on allotment on 1200 shares | 3,600 | ||
| Total amount due | 2,00,000 | ||
| Less : Already received | 75,000 | ||
| 1,25,000 | |||
| Less : Not received from Ramu | 3,600 | ||
| Allotment received | 1,21,400 |
| 3. Shares applied by Shamu | 700 | ||
| Shares allotted to Shamu | 20,000 | X 700 400 | |
| 35,000 |
4. Transfer to Capital Reserve
| All forfeited shares of Shamu were reissued & 600 share of Ramu were reissued | |||
| Share forfeited amount on Shamu’s shares | 2,800 | ||
| + Share forfeited amount on Ramu’s shares | 4,800 | X 600 | 2,400 |
| 1,200 | |||
| 5,200 | |||
| – Loss on Reissue | 2,000 | ||
| Transfer to Capital Reserve | 3,200 |
It all about Question 48 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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Question 36 Chapter 8 of +2-Part-1 – USHA Publication
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Chapter No. 8 – Company Accounts (Share Capital)
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