Question 81 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 81 Chapter 8 of +2-A

Table of Contents

The solution of Question 81 Chapter 8 of +2-A: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

81. JK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows:

On Application	—	₹ 2 per share,
On Allotment	—	₹ 4 per share; and
On First and Final call	—	Balance Amount.

The issue was oversubscribed three times. Applications for 30% of shares were rejected and money refunded. The allotment was made to the remaining applicants as follows:

categories	No of shares applied	No of shares allotted
I	80,000	40,000
II	25,000	10,000

Excess money paid by the applicants who were allotted shares was adjusted towards sums due on allotment.
Deepak, a shareholder belonging to Category I, who had applied for 1,000 shares, failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment. Afterwards, the first and final call was made and was duly received. The forfeited shares of Deepak and Raju were reissued at ₹11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.

The solution of Question 81 Chapter 8 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
	Bank A/c	Dr		3,00,000
	To share application A/c				3,00,000
	(Being the application money received )
	Share application A/c	Dr		3,00,000
	To Share capital A/c				1,00,000
	To Share allotment A/c				1,10,000
	To Bank A/c				90,000
	(Being application money transferred to equity share capital )
	Share allotment A/c	Dr		2,00,000
	To Share capital A/c				2,00,000
	(Being the allotment money due )
	Bank A/c	Dr		88,900
	To Share allotment A/c (w.n 2)				88,900
	(Being application money transferred to equity share capital )
	Equity share capital A/c	Dr		3,600
	To Equity share forfeiture A/c				1,100
	To Share allotment A/c				2,500
	(Being share forfeiture)
	Share first and final call A/c	Dr		1,97,600
	To Share capital A/c				1,97,600
	(Being first call money received )
	Bank A/c	Dr		1,97,600
	To Share first and final call A/c				1,97,600
	(Being the allotment money due )
	Bank A/c	Dr		6,600
	To securities premium A/c				6,000
	To share capital A/c				600
	(Being forfeited share reissue )
	Share forfeiture A/c	Dr		2,500
	To capital Reserve A/c				2,500
	(Being the gain on reissue transferred to capital reserve )

Wroking Note:-

Cate gories	Shares applied	Shares allotted	Money received for appli cation @ Rs 2 each	Money transferred to share capital @Rs 2	Excess appli cation money	Amount adjusted on the allotment	Money refunded
I	80,000	40,000	1,60,000	80,000	80,000	80,000	–
II	25,000	10,000	50,000	20,000	30,000	30,000	–
III	45,000	–	90,000	–	–	–	90,000
Total	1,50,000	50,000	3,00,000	1,00,000	1,10,000	1,10,000	90,000

Calculation of amount received on the allotment	Amount
Amount due on allotment	2,00,000
Less: Excess Received	(1,10,000)
Balance to be received	90,000
Less: Amount not paid by Deepak	(1,000)
Less: Amount paid to Raju	(100)
Amount received on the allotment	88,900

Shares allotted to Deepak	=	40,000	* 1,000	=	500 shares
		80,000

Amount paid by Deepak on the allotment	Amount
Amount received on the application	2,000
Less: Transferred to share capital	(1,000)
Excess received on the application	1,000
Amount due to allotment	2000
Less: Excess adjustment	(1,000)
Amount unpaid by Deepak	1,000

Shares applied to Raju	=	25,000	* 100	=	250 shares
		10,000

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Amount not paid by Raju on Allotment	Amount
Amount received on the application	500
Less: Transferred to share capital	(200)
Excess received on the application	300
Amount due to allotment	400
Less: Excess adjustment	(300)
Amount unpaid by Deepak	100