Question 84 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 84 Chapter 8 of +2-A

Table of Contents

The solution of Question 84 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)

84. Ruchi Ltd. issued for public subscription 40,000 Equity Shares of ₹ 10 each at a premium of ₹ 2 per share payable as::

On application	——	₹ 2 per share;
On allotment	——	₹ 5 per share (including premium),
On the first call	——	₹ 2 per share,
On the second and final call	——	₹ 3 per share.

Applications were received for 60,000 shares. The allotment was made on a pro-rata basis to the applicants for 48,000 shares, the remaining applications being refused. Money overpaid on the application was utilised towards sums due on allotment. Ram to whom 1,600 shares were allotted failed to pay the allotment money and Shyam to whom 2,000 shares were allotted failed to pay the two calls. These shares were subsequently forfeited after the second and final call was made. All the forfeited shares were reissued as fully paid-up @ ₹ 8 per share.Give necessary Journal entries for the above transactions.

The solution of Question 84 Chapter 8 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
	Bank A/c	Dr		1,20,000
	To share application A/c				1,20,000
	(Being the application money received )
	Share application A/c	Dr		1,20,000
	To Share capital A/c				80,000
	To Share allotment A/c				16,000
	To Bank A/c				24,000
	(Being application money transferred to equity share capital )
	Share allotment A/c	Dr		1,76,640
	To Share capital A/c				1,76,640
	(Being the allotment money due )
	Bank A/c	Dr		1,76,640
	To Share allotment A/c				1,76,640
	(Being allotment money received capital )
	Share first call A/c	Dr		80,000
	To Share capital A/c				80,000
	(Being the first call money due )
	Bank A/c	Dr		72,800
	To Share first call A/c				72,800
	(Being first call money received )
	Share second and final call A/c	Dr		1,20,000
	To Share capital A/c				1,20,000
	(Being the second and final call money due )
	Bank A/c	Dr		1,09,200
	To Share second and final call A/c				1,09,200
	(Being second and final call money received )
	Share capital A/c	Dr		16,000
	Securities Premium Reserve A/c	Dr		3,200
	To share forfeiture A/c				3,840
	To share allotment A/c				7,360
	To share first call A/c				3,200
	To share second and final call A/c				4,800
	(Being share forfeited )
	Bank A/c	Dr		20,000
	To share forfeiture A/c				10,000
	To share first call A/c				4,000
	To share second and final call A/c				6,000
	(Being share forfeited )
	Bank A/c	Dr		28,800
	Share Forfeiture A/c	Dr		7,200
	To share capital A/c				36,000
	(Being the gain on reissue transferred to capital reserve )
	Share forfeiture A/c	Dr		6,640
	To capital Reserve A/c				6,640
	(Being the gain on reissue transferred to capital reserve )

Working notes –

Shares applied by Ram	=	48,000	* 1,600	=	1,920 shares
		40,000

Excess money on Application	Amount
Money received on application (1,920 * Rs 2 )	3,840
Less: Application money transferred to share capital	(3,200)
	640

Calls-in-Arrears on Allotment = Share Allotment due (1,600 shares × Rs.5) – Excess money on Application
= 8,000 – 640 = Rs.7,360

Money received on the first call	Amount
Share first call due (40,000 * Rs 2)	80,000
Less: calls in arrear by Ram and Shyam (3600 * Rs 2 )	(7200)
	72,800

Money received on final call	Amount
Share final call money due ( 40,000 * Rs 3)	1,20,000
Less: Calls in arrear by Ram and Shyam ( 3,600 * Rs 3 )	(10,800)
	1,09,200

Particulars	Amount
Share Forfeiture (Cr.)	3,840
Add: Share Forfeiture on Shyam shares	10,000
Less: Share Forfeiture Debit	(7,200)
Balance in Share Forfeiture A/c	6,640