Question 89 Chapter 8 of +2-A - T.S. Grewal 12 Class

Question 89 Chapter 8 of +2-A

Table of Contents

The solution of Question 89 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)

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

On application	—	₹ 3 per share,
On allotment	—	₹ 4 per share,
On the first and final call	—	₹ 3 per share.

Applications were received for 75,000 shares and pro-rata allotment was made as:Applicants for 40,000 shares were allotted 30,000 shares on a pro-rata basis.Applicants for 35,000 shares were allotted 30,000 shares on pro-rata basis.Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment.Shamu, who had applied for 700 shares out of the group applying for 35,000 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro-rata basis. 8 per share as fully paid-up. The reissued shares included all the forfeited shares of Shamu.Pass necessary Journal entries to record the above transactions.

The solution of Question 89 Chapter 8 of +2-A: –


Date	Particulars		L.F.	Debit	Credit
	Bank A/c	Dr		2,25,000
	To share application A/c				2,25,000
	(Being the application money received )
	Share application A/c	Dr		2,25,000
	To Share capital A/c				1,50,000
	To share allotment A/c				75,000
	(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		1,21,400
	To Share allotment A/c				1,21,400
	(Being allotment money received capital )
	Share capital A/c	Dr		8,400
	To share forfeiture A/c				4,800
	To share allotment A/c				3,600
	(Being share forfeited )
	Share first call A/c	Dr		1,46,400
	To Share capital A/c				1,46,400
	(Being the first call money due )
	Bank A/c	Dr		1,45,200
	To Share first call A/c				1,45,200
	(Being first call money received )
	Share capital A/c	Dr		4,000
	To share forfeiture A/c				2,800
	To share first call A/c				1,200
	(Being share forfeited )
	Bank A/c	Dr		8,000
	Share Forfeiture A/c	Dr		2,000
	To share capital A/c				10,000
	(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 )
	Share forfeiture A/c	Dr		3,200
	To capital Reserve A/c				3,200
	(Being the gain on reissue transferred to capital reserve )

Working notes –

Shares applied by Ramu	=	40,000	* 1,200	=	1,600 shares
		30,000

Amount not paid by Ramu on Allotment	Amount
Money received on application(1600 shares * Rs 3)	4800
Less: Application money transferred to share capital (1,200 shares * Rs 3)	(3,600)
Excess received on the application	1,200
Amount due on allotment	4,800
Less: Excess Adjustment	(1,200)
Amount unpaid by Ramu	3,600

	Amount
Share Allotment due	2,00,000
Less: Excess money on application	(75,000)
Less: calls in arrear on the allotment	(3,600)

Money received on the allotment	1,21,400

Shares allotted to Shamu	=	20,000	* 700	=	400 shares
		35,000

	Amount
Money received on application(48,800 shares * Rs 3)	1,46,400
Less: calls in arrear by Shamu (400 shares * Rs 3)	(1,200)
Money received on the allotment	1,45,200