Question

Murari Ltd. invited applications for issuing 80,000 equity shares of Rs.10 each at a premium of Rs.4 per share. The amount per share was payable as follows: Rs.5 on application and Rs.9 (including premium) on allotment. Applications were received for 1,40,000 shares and allotment was made on pro-rata basis to all the applicants. Money overpaid on application was utilised towards sums due on allotment. The allotment money was duly received except from Sameer who had applied for 1,400 shares. His shares were forfeited. Pass the necessary journal entries in the books of Murari Ltd. to record the above transactions. Open calls-in-arrears account wherever required.

Hint:

Pro-rata adjustments for oversubscriptions require careful allocation of excess amounts to the subsequent calls or allotments.

Answer 1

Journal Entries: \[ \begin{array}{|l|c|c|} \hline \textbf{Particulars} & \textbf{Dr. Amount (Rs.)} & \textbf{Cr. Amount (Rs.)} \\ \hline \text{Bank A/c Dr.} & 7,00,000 & \\ \text{To Share Application A/c} & & 7,00,000 \\ \hline \text{Share Application A/c Dr.} & 7,00,000 & \\ \text{To Equity Share Capital A/c} & & 4,00,000 \\ \text{To Share Allotment A/c} & & 3,00,000 \\ \hline \text{Bank A/c Dr.} & 6,40,000 & \\ \text{Calls-in-Arrears A/c Dr.} & 12,600 & \\ \text{To Share Allotment A/c} & & 6,52,600 \\ \hline \text{Equity Share Capital A/c Dr.} & 14,000 & \\ \text{To Forfeited Shares A/c} & & 7,000 \\ \text{To Calls-in-Arrears A/c} & & 7,000 \\ \hline \end{array} \]