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 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:

Ensure accurate pro-rata adjustments for oversubscription and proper treatment of forfeited shares when calculating forfeiture amounts.

Answer 1

Journal Entries: \begin{center} \begin{tabular}{|l|p{8cm}|r|r|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
-- & Bank A/c & 7,20,000 & --
& To Share Application A/c & -- & 7,20,000
& \textit{(Application money received for 1,80,000 shares)} & &
-- & Share Application A/c & 7,20,000 & --
& To Share Capital A/c & -- & 4,00,000
& To Share Allotment A/c & -- & 2,80,000
& To Bank A/c & -- & 40,000
& \textit{(Application adjusted for 1,00,000 shares, refund for 30,000 shares)} & &
-- & Share Allotment A/c & 5,00,000 & --
& To Share Capital A/c & -- & 5,00,000
& \textit{(Allotment due)} & &
-- & Bank A/c & 5,00,000 & --
& To Share Allotment A/c & -- & 5,00,000
& \textit{(Allotment money received in full)} & &
-- & First and Final Call A/c & 1,00,000 & --
& To Share Capital A/c & -- & 1,00,000
& \textit{(First and final call due)} & &
-- & Bank A/c & 95,000 & --
& To First and Final Call A/c & -- & 95,000
& \textit{(First and final call received except Mansi's \rupee 5,000)} & &
-- & Share Capital A/c & 50,000 & --
& Securities Premium A/c & 10,000 & --
& To Share Forfeiture A/c & -- & 35,000
& To Calls in Arrears A/c & -- & 25,000
& \textit{(5,000 shares forfeited due to non-payment by Mansi)} & &
\end{tabular} \end{center}