Question 87 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 87 Chapter 8 of +2-A

Table of Contents

The solution of Question 87 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)

87. Raja Ltd. invited applications for issuing 50,000 Equity Shares of ₹ 10 each . The amount was payable as follows :

On application   —   ₹ 3 per share
On allotment —   ₹ 5 per share,
On first and final call   — Balance.

Applications for 70,000 shares were received. The allotment was made to all applicants on a pro-rata basis. Excess money received on the application was adjusted towards sums due on allotment. Ramesh, who had applied for 700 shares, did not pay the allotment money and on his failure to pay the allotment money his shares were forfeited. Afterwards, the first and the final call was made. Adhar, who had been allotted 500 shares, did not pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 900 shares were reissued at ₹ 8 per share as fully paid-up. The reissued shares included all the shares of Ramesh.Pass necessary journal entries for the above transactions in the books of the company.

The solution of Question 87 Chapter 8 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
	Bank A/c	Dr		2,10,000
	To share application A/c				2,10,000
	(Being the application money received )
	Share application A/c	Dr		2,10,000
	To Share capital A/c				1,50,000
	To share allotment A/c				60,000
	(Being application money transferred to equity share capital )
	Share allotment A/c	Dr		2,50,000
	To Share capital A/c				2,50,000
	(Being the allotment money due )
	Bank A/c	Dr		1,88,100
	To Share allotment A/c				1,88,100
	(Being allotment money received capital )
	Share capital A/c	Dr		4,000
	To share forfeiture A/c				1,900
	To share allotment A/c				2,100
	(Being share forfeited )
	Share first call A/c	Dr		99,000
	To Share capital A/c				99,000
	(Being the first call money due )
	Bank A/c	Dr		99,000
	To Share first call A/c				99,000
	(Being first call money received )
	Share capital A/c	Dr		5,000
	To share forfeiture A/c				1,000
	To share first call A/c				4,000
	(Being share forfeited )
	Bank A/c	Dr		7,200
	Share Forfeiture A/c	Dr		1,800
	To share capital A/c				9,000
	(Being forfeited share reissue )
	Share forfeiture A/c	Dr		3,500
	To capital Reserve A/c				3,500
	(Being the gain on reissue transferred to capital reserve )

Working notes –

Shares applied by Ramesh =	=	50,000	* 700	=	500 shares
		70,000

Excess money on Application	Amount
Money received on application (700 * Rs 3 )	2,100
Less: Application money transferred to share capital	(1,500)

	600

Allotment money due on Share allotted (Rs.5 × 500)	2,500
Less: Excess application money received	(600)
Allotment money due but not received	1,900

Allotment money	Amount
Allotment due (gross)(50,000 * Rs 5)	2,50,000
Less: calls in arrear (1,900) +adjusted (60,000)	(61900)
	1,88,100

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Forfeiture of 500 shares issued to Aadhar
Amount due on First and Final Call (Rs.2 × 500) =1,000	99,000
Less: Calls-in-Arrears	(1,000)
	98,000
Share Forfeiture on Ramesh’s	2,100
Properties Share Forfeiture on Aadhar’s shares 4,000 * 400/500	3,200
	5,300
Less: loss on the reissue	(1,800)
Properties Share Forfeiture on Aadhar’s shares 4,000 * 400/500	3,500