Question

Lazal Ltd. invited applications for issuing 2,00,000 equity shares of \rupee 10 each, at 20\% premium. Amount per share was payable as follows: \rupee 5 on application; \rupee 4 (including premium) on allotment; and balance on final call. Public applied for 3,20,000 shares, out of which applications for 20,000 shares were rejected and shares were allotted on pro-rata basis to the remaining applicants. Kavita, an applicant of 15,000 shares, failed to pay allotment and call money. Her shares were forfeited. Pass necessary Journal Entries for the above transactions in the books of the company.

Hint:

Handle pro-rata adjustments for oversubscription and ensure forfeited shares are recorded with proper calls-in-arrears adjustments.

Answer 1

Journal Entries: \[ \begin{array}{|c|c|c|c|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
2023-04-01 & Bank A/c & 16,00,000 &
& To Share Application A/c & & 16,00,000
2023-04-01 & Share Application A/c & 16,00,000 &
& To Share Capital A/c & & 10,00,000
& To Securities Premium A/c & & 6,00,000
2023-04-01 & Bank A/c & 7,40,000 &
& Calls in Arrears A/c (15,000 \times \rupee 4) & 60,000 &
& To Share Allotment A/c & & 8,00,000
2023-04-01 & Share Capital A/c (15,000 shares) & 1,50,000 &
& To Share Forfeiture A/c & & 90,000
& To Calls in Arrears A/c & & 60,000
\end{array} \]