Question

Sona Ltd. invited applications for issuing 60,000 equity shares of ₹ 50 each. The amount was payable as follows:
On Application – ₹ 20 per share
On Allotment – ₹ 25 per share
On First and final call – Balance
Applications for 90,000 shares were received. Applications for 10,000 shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Rahul, to whom 600 shares were allotted, failed to pay the allotment money and his shares were forfeited immediately. Afterwards, the first and final call was made. Mona, to whom 1,000 shares were allotted, failed to pay the first and final call. Her shares were also forfeited. Pass necessary journal entries in the books of Sona Ltd. for the above transactions.

Hint:

Always adjust excess application money to allotment and handle forfeiture separately.

Answer 1

Journal Entries in the books of Sona Ltd.

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c     To Share Application A/c (Receipt of application money for 90,000 shares)	18,00,000	18,00,000
Share Application A/c     To Bank A/c (Refund of application money for 10,000 shares)	2,00,000	2,00,000
Share Application A/c     To Share Capital A/c     To Share Allotment A/c (Transfer of application money)	16,00,000	12,00,000 4,00,000
Share Allotment A/c     To Share Capital A/c (Due on allotment)	15,00,000	15,00,000
Bank A/c     To Share Allotment A/c (Allotment money received after adjusting application excess)	10,20,000	10,20,000
Share Capital A/c     To Share Forfeiture A/c     To Share Allotment A/c (Forfeiture of Rahul’s 600 shares)	30,000	24,000 6,000
Share First and Final Call A/c     To Share Capital A/c (First and final call due)	6,00,000	6,00,000
Bank A/c     To Share First and Final Call A/c (Call money received)	5,50,000	5,50,000
Share Capital A/c     To Share Forfeiture A/c     To Share First and Final Call A/c (Forfeiture of Mona’s 1,000 shares)	50,000	40,000 10,000