Question

Alexia Limited invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 10 per share. The amount was payable as follows :
On application ₹ 9 per share (including premium ₹ 6 per share)
On allotment ₹ 8 per share (including premium ₹ 4 per share)
On first and final call ₹ 3 per share.
Applications were received for 1,50,000 equity shares and allotment was made to the applicants as follows :
Category A : Applicants for 90,000 shares were allotted 70,000 shares.
Category B : Applicants for 60,000 shares were allotted 30,000 shares.
Excess money received on application was adjusted towards allotment and first and final call.
Shekhar, who had applied for 1,200 shares, failed to pay the first and final call. Shekhar belonged to Category B.
Pass necessary journal entries for the above transactions in the books of Alexia Limited. Open calls in arrears and calls in advance account wherever necessary.

Hint:

Adjust excess application money first against allotment, then calls, and record calls in arrears for any default.

Answer 1

1. Bank A/c Dr. ₹ 13,50,000
To Equity Share Application A/c ₹ 13,50,000
(Being application money received on 1,50,000 shares @ ₹ 9 per share)
2. Equity Share Application A/c Dr. ₹ 13,50,000
To Share Capital A/c ₹ 4,20,000
To Securities Premium A/c ₹ 2,80,000
To Equity Share Allotment A/c ₹ 5,60,000
To Calls in Advance A/c ₹ 80,000
(Being application money adjusted towards capital, premium, allotment, and calls in advance)
Calculation details:
Total shares allotted = 1,00,000
Application money required = 1,00,000 × ₹ 9 = ₹ 9,00,000
Excess application = ₹ 13,50,000 – ₹ 9,00,000 = ₹ 4,50,000
Allocation towards allotment = 70,000 × ₹ 8 = ₹ 5,60,000
3. Equity Share Allotment A/c Dr. ₹ 8,00,000
To Share Capital A/c ₹ 4,00,000
To Securities Premium A/c ₹ 4,00,000
(Being allotment due on 1,00,000 shares @ ₹ 8 each)
4. Bank A/c Dr. ₹ 2,40,000
To Equity Share Allotment A/c ₹ 2,40,000
(Being balance of allotment received after adjusting excess application money)
5. Equity Share First and Final Call A/c Dr. ₹ 3,00,000
To Share Capital A/c ₹ 3,00,000
(Being call due @ ₹ 3 per share on 1,00,000 shares)
6. Bank A/c Dr. ₹ 2,96,400
Calls in Arrears A/c Dr. ₹ 3,600
To Equity Share First and Final Call A/c ₹ 3,00,000
(Being call money received except on Shekhar’s 1,200 shares)
Calculation of arrears:
Shekhar defaulted on 1,200 × ₹ 3 = ₹ 3,600