Question 85 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 85 Chapter 8 of +2-A

Table of Contents

The solution of Question 85 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)

85. Competent Ltd. issued a prospectus inviting applications for 50,000 Equity Shares of ₹ 10 each, payable ₹ 5 as per application (including ₹ 2 as premium), ₹ 4 as per allotment and the balance towards the first and final call.
Applications were received for 65,000 shares. Application money received on 5,000 shares was refunded with letter of regret and allotments were made on a pro-rata basis to the applicants of 60,000 shares. Money overpaid on applications including premium was adjusted on account of sums due on allotment.
Mr Sharma to whom 700 shares were allotted failed to pay the allotment money and his shares were forfeited by the Directors on his subsequently failed to pay the call money. All the forfeited shares were subsequently sold to Mr Jain credited as fully paid-up for ₹ 9 per share.
You are required to set out the Journal entries and the relevant entries in the Cash Book.

The solution of Question 85 Chapter 8 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
	Share application A/c	Dr		3,00,000
	To Share capital A/c				1,50,000
	To Securities premium A/c				1,00,000
	To Shares Allotment A/c				50,000
	(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 )
	Share first call A/c	Dr		1,50,000
	To Share capital A/c				1,50,000
	(Being the first call money due )
	Share capital A/c	Dr		7,000
	To share forfeiture A/c				2,800
	To share allotment A/c				2,100
	To share first and final call A/c				2,100
	(Being share forfeited )
	Share Forfeiture A/c	Dr		700
	To Share capital A/c				700
	(Being forfeited share reissue )
	Share forfeiture A/c	Dr		2,100
	To capital Reserve A/c				2,100
	(Being the gain on reissue transferred to capital reserve )

Dr.	Cash A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
	To equity share application a/c		3,25,000		By equity share application a/c		25,000
	To equity share allotment a/c		1,47,900
	To equity share first, call a/c		1,47,900
	To equity share capital a/c		6,300
					By Balance C/d		6,02,100
			6,27,100				6,27,100

Working notes –

Excess money on Application	Amount
Money received on application (840 * Rs 5 )	4,200
Less: Application money transferred to share capital + security premium (1,400 )	(2,100 + 1,400)
	700

Money received on Allotment	Amount
Share allotment due (50,000 * R 4)	2,00,000
Less: Excess money on application + calls in arrear (3600 * Rs 2 )	(50,000+ 2,100))
	1,47,900

Money received on first and final call	Amount
Share first and final call money due ( 4,000 * Rs 3)	1,50,000
Less: Calls in arrear by Ram and Shyam ( 3,600 * Rs 3 )	(2,100)
	1,47,900

Particulars	Amount
Share Forfeiture (Cr.)	4,200
less: Share Forfeiture on Shyam shares	(1,400)
Less: Share Forfeiture Debit	(700)
Balance in Share Forfeiture A/c	2,100