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 first and 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 applications. 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:

Forfeited shares require adjustments to share capital, premium, and arrears accounts. Ensure entries align with the amounts unpaid.

Answer 1

Journal Entries: \begin{center} \begin{tabular}{|l|p{8cm}|r|r|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
-- & Bank A/c & 16,00,000 & --
& To Share Application A/c & -- & 16,00,000
& \textit{(Application money received for 3,20,000 shares)} & &
-- & Share Application A/c & 16,00,000 & --
& To Share Capital A/c & -- & 10,00,000
& To Share Allotment A/c & -- & 5,00,000
& To Bank A/c & -- & 1,00,000
& \textit{(Adjustment of application money for 2,00,000 shares, refund for 20,000 shares)} & &
-- & Share Allotment A/c & 8,00,000 & --
& To Share Capital A/c & -- & 6,00,000
& To Securities Premium A/c & -- & 2,00,000
& \textit{(Allotment due, including premium)} & &
-- & Bank A/c & 7,40,000 & --
& To Share Allotment A/c & -- & 7,40,000
& \textit{(Allotment money received except Kavita's \rupee 60,000)} & &
-- & First and Final Call A/c & 10,00,000 & --
& To Share Capital A/c & -- & 10,00,000
& \textit{(First and final call due)} & &
-- & Bank A/c & 9,25,000 & --
& To First and Final Call A/c & -- & 9,25,000
& \textit{(First and final call received except Kavita's \rupee 75,000)} & &
-- & Share Capital A/c & 90,000 & --
& Securities Premium A/c & 30,000 & --
& To Share Forfeiture A/c & -- & 45,000
& To Calls in Arrears A/c & -- & 75,000
& \textit{(15,000 shares forfeited due to non-payment by Kavita)} & &
\end{tabular} \end{center}