Question 71 Chapter 8 of +2-A
71. Kamal Ltd. was formed on 1st April 2010 with an authorized capital of ₹ 2,00,000, divided into 2,000 Equity Shares of ₹ 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of ₹ 5 per share payable as:
| On application | ₹ 10 per share, |
| On allotment | ₹ 25 per share(including premium), |
| On the first call | ₹ 40 per share, |
| On final call | ₹ 30 per share. |
Applications were received for 900 shares which were duly allotted and the allotment money was received in full. At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ ₹ 60 per share, ₹ 70 per share paid-up. A final call has not been made. You are required to (i) give necessary journal entries to record the above transactions and (ii) show how to share capital would appear in the Balance Sheet of the company.
The solution of Question 71 Chapter 8 of +2-A: –
| Date | Particulars |
L.F. | Debit | Credit | |
| Building A/c | Dr | 1,00,000 | |||
| To vendor A/c | 1,00,000 | ||||
| (Being building purchased from vendor ) | |||||
| Vendor A/c | Dr | 1,00,000 | |||
| To equity Share capital A/c | 1,00,000 | ||||
| (Being equity shares reissue to the vendor of the building ) | |||||
| Bank A/c | Dr | 9,000 | |||
| To share application A/c | 9,000 | ||||
| (Being the application money received ) | |||||
| Share application A/c | Dr | 9,000 | |||
| To Share capital A/c | 9,000 | ||||
| (Being application money transferred to equity share capital ) | |||||
| Share allotment A/c | Dr | 22,500 | |||
| To Share capital A/c | 18,000 | ||||
| To Securities premium A/c | 4,500 | ||||
| (Being the allotment money due ) | |||||
| Bank A/c | Dr | 22,500 | |||
| To Share allotment A/c | 22,500 | ||||
| (Being allotment money transferred to equity share capital ) | |||||
| Share first call A/c | Dr | 36,000 | |||
| To Share capital A/c | 36,000 | ||||
| (Being the first call money due ) | |||||
| Bank A/c | Dr | 32,000 | |||
| Calls in arrear A/c | Dr | 4,000 | |||
| To Share first call A/c | 36,000 | ||||
| (Being first call money received ) | |||||
| Equity share capital A/c | Dr | 7,000 | |||
| To Share forfeiture A/c | 3,000 | ||||
| To calls in arrear A/c | 4,000 | ||||
| (Being the gain on reissue transferred to capital reserve ) | |||||
| Bank A/c | Dr | 6,000 | |||
| Share forfeiture A/c | Dr | 1,000 | |||
| To calls in arrear A/c | 7,000 | ||||
| (Being forfeited share reissue ) | |||||
| Forfeited share A/c | Dr | 2,000 | |||
| To capital Reserve A/c | 2,000 | ||||
| (Being the gain on reissue transferred to capital reserve ) | |||||
|
Particulars (1) |
Note no. (2) |
Figures as at the end of the Current Reporting Period (3) |
Figures as at the end of the Previous Reporting Period (4) |
| I. Equity and Liabilities | |||
| 1. Shareholders’ Funds | |||
| (a) Share Capital | 1,63,000 | ||
| (b) Reserves and Surplus | 6,500 | ||
| (c) Money Received against Share Warrants | |||
| 2. Share Application Money Pending Allotment | |||
| 3. Non-Current Liabilities | |||
| 4. Current Liabilities | |||
| II. Assets | |||
| 1.Non-Current Assets | |||
| (a) Fixed Assets | |||
| Tangible Assets | 1,00,000 | ||
| 2. Current Assets | |||
| (d) Cash and Cash equivalents | 69,500 | ||
| Total | 1,69,500 |
| Particulars |
Details |
Amount |
| Share capital | ||
| Authorized capital | ||
| 2,000 Equity share of Rs 100 each | 2,00,000 |
|
| Issued capital | ||
| 2,000 equity shares of Rs 100 each | 2,00,000 | |
| Subscribed capital | ||
| Subscribed and fully paid-up | ||
| 1,000 Equity shares of Rs100 every 900 shares of Rs 70 called up calls in arrear (63000) | 1,63,000 | |
| Capital reserve | 6,500 | |
| Securities premium | 1,00,000 | |
| Cash at bank | 69500 |
Calculation Capital Reserve
Capital Reserve
=Share Forfeiture Cr. (at the time of forfeiture) – Share forfeiture Dr. (at the time of re-issue)
= 3,000 – 1,000 = Rs.2,000
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Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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