Question 53 Chapter 8 of +2-Part-1
53. (Prorata Allotment/Forfeiture/Reissue) XYZ Ltd. invited application for 2,00,000 equity shares of Rs. 10 each. The amount was payable as follows:
On Application Rs. 3 per share
On Allotment RS. 5 per share
On First and final call Rs. 2 per share.
Application for 3,00,000 shares were received and pro-rata allotment was made to all the applicants on the following basis:
Applications for 2,00,000 shares were allotted 1,50,000 shares on prorata basis. Application for 1,00,000 shares were allotted 50,000 shares on pro-rata basis. Bajaj, who was allotted 3,000 shares out of the group applying for 2,00,000 shares, failed today the allotment money. His shares were forfeited immediately after allotment.
Sharma who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call. His shares were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid up @ Rs. 8 per share.
The reissued shares included all the forfeited shares to Bajaj.
Pass the necessary journal entries to record the above transactions,
The solution of Question 53 Chapter 8 of +2 Part-1: –
Journal
| Date | Particulars |
L.F. | Debit | Credit | |
| A | Bank A/c(3,00,000 X 3) | Dr. | 9,00,000 | ||
| To Share Application A/c | 9,00,000 | ||||
| (Being the receipt of application money) | |||||
| B | Share Application A/c | Dr. | 9,00,000 | ||
| To Share capital A/c | 6,00,000 | ||||
| To Share allotment A/c | 3,00,000 | ||||
| (Being pro rata allotment made ) | |||||
| C | Share allotment A/c | Dr. | 10,00,000 | ||
| To Share capital A/c | 10,00,000 | ||||
| (Being amount due on allotment ) | |||||
| D | Bank A/c | Dr. | 6,88,000 | ||
| Calls in arrears A/c | Dr. | 12,000 | |||
| To Share allotment A/c | 7,00,000 | ||||
| (Being amount received on allotment) | |||||
| E | Share capital A/c | Dr. | 24,000 | ||
| To Share Forfeited A/c | 12,000 | ||||
| To Calls in Arrears A/c | 12,000 | ||||
| (Being 3,000 shares fortified) | |||||
| F | Share final Call A/c | Dr. | 3,94,000 | ||
| To Share capital A/c | 3,94,000 | ||||
| (Being amount due on final call) | |||||
| G | Bank A/c | Dr. | 3,92,000 | ||
| Calls in arrears A/c | Dr. | 2,000 | |||
| To Share Final call A/c | 3,94,000 | ||||
| (Being amount received on allotment ) | |||||
| H) | Share capital A/c | Dr. | 10,000 | ||
| To Share Forfeited A/c | 8,000 | ||||
| To Calls in Arrears A/c | 2,000 | ||||
| (Being 1,000 shares fortified) | |||||
| I) | Bank A/c | Dr. | 28,000 | ||
| Share Fortified A/c | Dr. | 7,000 | |||
| To Share capital A/c | 35,000 | ||||
| (Being3,500 shares reissued) | |||||
| J) | Share Fortified A/c | Dr. | 9,000 | ||
| To Capital Reserve A/c | 9,000 | ||||
| (Being balance in share fortified transferred to capital reserve) | |||||
Working Notes:
1. Amount received on allotment
| Shares applied by Bajaj = 2,00,000/1,50,000 X 3,000= 4,000 shares | |
| Application money received from Bajaj (4,000 X 3) | 12,000 |
| Less : Adjusted (3,000 X 3) | 9,000 |
| Retained for allotment | 2,500 |
| Allotment money due from Bajaj (3,000 X 5) | 15,000 |
| Less : Already received | 3,000 |
| Not received on allotment | 6,000 |
| Total Allotment money due |
10,00,000 |
| Less : Already received |
3,00,000 |
| 7,00,000 | |
| Less : Already received on Bajaj Share |
12,000 |
| Not received on allotment |
6,88,000 |
2. Amount transferred to capital reserve
| Shares forfeited amount on 3,000 shares | 12,000 |
| Add: proportionate Shares forfeited on 500 shares which = 8,000/1,000 X 500 | 4,000 |
| 16,000 | |
| Less : loss on reissue | 7,000 |
| Transferred to Capital reserve | 9,000 |
3. Shares allotted to Sharma
Shares applied by Sharma ( category ii) 2,000
Shares allotted to Sharma = 50,000/1,00,000 X 2,000 = 1,000 shares
It all about Question 53 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
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement