Question 53 Chapter 8 of +2-Part-1 – USHA Publication 12 Class Part – 1

Q-53 - CH-8 - Usha +2 Book 2018 - Solution-min

Question 53 Chapter 8 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

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

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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