Question

Kavya Ltd. invited applications for issuing 30,000 shares of Rs.10 each at a premium of Rs.2 per share. The amount was payable as follows: On application and allotment Rs.7 per share, On first and final call Rs.5 per share (including Rs.2 premium). Applications were received for 33,000 shares. Applications for 3,000 shares were rejected, and money returned to the applicants. Applications for 30,000 shares were accepted in full. The application and allotment money was duly received. The first and final call was made and money received except from a shareholder holding 500 shares. His shares were forfeited. All these shares were re-issued to Kartik as fully paid for Rs.8 per share. Pass necessary journal entries for the above transactions in the books of Kavya Ltd. Open calls-in-arrears account wherever required.

Hint:

Reissued shares must be accounted for at the actual reissue price. Any surplus in forfeited shares account is transferred to capital reserve.

Answer 1

Journal Entries: \[ \begin{array}{|l|c|c|} \hline \textbf{Particulars} & \textbf{Dr. Amount (Rs.)} & \textbf{Cr. Amount (Rs.)} \\ \hline \text{Bank A/c Dr.} & 2,31,000 & \\ \text{To Share Application A/c} & & 2,31,000 \\ \hline \text{Share Application A/c Dr.} & 2,31,000 & \\ \text{To Equity Share Capital A/c} & & 2,10,000 \\ \text{To Share Allotment A/c} & & 21,000 \\ \hline \text{Bank A/c Dr.} & 1,50,000 & \\ \text{To Share Allotment A/c} & & 1,50,000 \\ \hline \text{Bank A/c Dr.} & 2,25,000 & \\ \text{To Share Capital A/c} & & 2,25,000 \\ \hline \text{Equity Share Capital A/c Dr.} & 5,000 & \\ \text{To Forfeited Shares A/c} & & 3,000 \\ \text{To Calls-in-Arrears A/c} & & 2,000 \\ \hline \text{Bank A/c Dr.} & 4,000 & \\ \text{Forfeited Shares A/c Dr.} & 1,000 & \\ \text{To Equity Share Capital A/c} & & 5,000 \\ \hline \end{array} \]