Question

Chand Ltd. invited applications for issuing 1,00,000 equity shares of \rupee 10 each at a premium of \rupee 2 per share. The amount per share was payable as follows: \rupee 4 (including premium) on application, \rupee 5 on allotment, and balance on first and final call. Applications were received for 1,80,000 shares of which applications for 30,000 shares were rejected, and remaining applicants were allotted shares on a pro-rata basis. Mansi, holding 5,000 shares, failed to pay first and final call money, and her shares were forfeited. Pass necessary Journal entries for the above transactions in the books of the company.

Hint:

Handle pro-rata allocation for oversubscription carefully. Forfeited shares' unpaid amounts are adjusted in the Calls in Arrears account.

Answer 1

Journal Entries: \[ \begin{array}{|c|c|c|c|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
2023-04-01 & Bank A/c & 7,20,000 &
& To Share Application A/c & & 7,20,000
2023-04-01 & Share Application A/c & 7,20,000 &
& To Share Capital A/c & & 4,00,000
& To Securities Premium A/c & & 2,00,000
& To Share Allotment A/c & & 1,20,000
2023-04-01 & Bank A/c & 5,00,000 &
& To Share Allotment A/c & & 5,00,000
2023-04-01 & Share First and Final Call A/c & 1,00,000 &
& To Share Capital A/c & & 1,00,000
2023-04-01 & Bank A/c & 95,000 &
& Calls in Arrears A/c & 5,000 &
& To Share First and Final Call A/c & & 1,00,000
2023-04-01 & Share Capital A/c (5,000 \times \rupee 10) & 50,000 &
& To Share Forfeiture A/c & & 45,000
& To Calls in Arrears A/c & & 5,000
\end{array} \]