Question 88 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 88 Chapter 8 of +2-A

Table of Contents

The solution of Question 88 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)

88. Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹10 each at a premium of ₹ 3 per share payable as follows::

On application	—	₹2
On allotment (including premium)	—	₹5
On the first call	—	₹3
On the second call	—	₹3

Applications were received for 30,000 shares and allotment was made on a pro-rata basis. Money overpaid on application s was adjusted to the amount due on allotment. Mr Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited.Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for ₹ 9 per share, the whole of Mr Mohit’s shares being included.

The solution of Question 88 Chapter 8 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
	Bank A/c	Dr		60,000
	To share application A/c				60,000
	(Being the application money received )
	Share application A/c	Dr		60,000
	To Share capital A/c				40,000
	To share allotment A/c				20,000
	(Being application money transferred to equity share capital )
	Share allotment A/c	Dr		1,00,000
	To Share capital A/c				40,000
	To Securities premium A/c				60,000
	(Being the allotment money due )
	Bank A/c	Dr		78,400
	To Share allotment A/c				78,400
	(Being allotment money received capital )
	Share first call A/c	Dr		60,000
	To Share capital A/c				60,000
	(Being the first call money due )
	Bank A/c	Dr		57,000
	To Share first call A/c				57,000
	(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		2,800
	Securities Premium Reserve A/c	Dr		1,200
	To share forfeiture A/c				1,200
	To share allotment A/c				1,600
	To share first call A/c				1,200
	(Being forfeited share reissue )
	Share the second call A/c	Dr		58,800
	To Share capital A/c				58,800
	(Being the Second call money due )
	Bank A/c	Dr		57,000
	To Share Second call A/c				57,000
	(Being second call money received )
	Share capital A/c	Dr		6,000
	To share forfeiture A/c				2,400
	To share first call A/c				1,800
	To share second call A/c				1,800
	(Being share forfeited )
	Bank A/c	Dr		7,200
	Share Forfeiture A/c	Dr		800
	To share capital A/c				8,000
	(Being forfeited share reissue )
	Share forfeiture A/c	Dr		2,000
	To capital Reserve A/c				2,000
	(Being the gain on reissue transferred to capital reserve )

Particulars	Details	Amount
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital		1,98,800
(b) Reserves and Surplus		60,800
(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
2. Current Assets
(d) Cash and Cash equivalents		2,59,600
Total		2,59,600

Particulars	Details	Amount
Share capital
Authorized capital
Equity share of Rs ….each
Issued capital
20,000 equity shares of Rs 10 each		2,00,000
Subscribed capital
Subscribed and fully paid-up
1,98,000 Equity shares of Rs10 each + forefeiture (800)		1,98,800
Capital reserve		2,000
Building		58,800
Cash at bank		2,59,600

Working notes –

Shares applied by Mohit	=	30,000	* 400	=	600 shares
		20,000

Advertisement-X

Amount not paid by Aditya on Allotment	Amount
Money received on the application	1,200
Less: Application money transferred to share capital	(800)
Excess received on the application	400
Amount due on allotment	2,000
Less: Excess Adjustment	(400)
Amount unpaid by Mohit	1,600

Calculation of Amount to be transferred to Capital Reserve –
Amount forfeited on Mohit’s 400 shares (600*2)	1,200
Amount forfeited on jolly’s 400 shares (400 * 4)	(1600)
Total credit balance in share forfeiture	2,800
Less: Discount allowed on 800 shares reissued	(800)
Amount to be transferred to Capital Reserve	2,000