1. D Ltd., issued prospectus inviting applications for 20,000 shares of Rs.10 each at a
premium of Rs. 2 per share payable as follows:
On application - Rs. 3, on allotment – Rs. 5 (incl premium), on First call Rs. 2 and on
second call – Rs. 2. Applications were received for 30000 shares and allotment was
made pro rata to the applicants of 24000 shares. Money overpaid on application was
employed on account of sums due on allotment
Mr. B to whom 400 shares were allotted failed to pay the allotment money and on his
subsequent failure to pay the first call his shares were forfeited. Mr. L the holder of
600 shares failed to pay both the calls and his shares were forfeited after the second
call.
Of the shares forfeited 800 shares were re-issued to Mr.S credited as fully paid for
Rs.9 per share the whole of Mr. B shares being included.
Pass the necessary Journal Entries.
Answers
Answer:
Share Application received for 24,000 shares of Rs 2 each = Rs 48,000
Share Allotted (24,000 shares of Rs 2 each) = Rs 40,000
Excess Application money received = Rs 8,000 (Rs 40,000-Rs 48,000)
Share Allotment is due for 20,000 shares of Rs 5 each = Rs 1,00,000
Excess Application adjusted = Rs 8,000
Amount to be received on Share Allotment = Rs 92,000 (Rs 1,00,000-Rs 8,000)
20,000 shares were allotted to those, who applied for = 24,000 shares
400 shares were allotted to those, who applied for = 400/20,000*24,000 = 480
Share Application received for 480 shares of Rs 2 each = Rs 960
Share Alloted (400 shares of Rs 2 each) = Rs 800
Excess Application money received = Rs 160 (Rs 960-Rs 800)
Share Allotment is due for 400 shares of Rs 5 each = Rs 2,000
Excess Application adjusted = Rs 160
Amount to be received on Share Allotment = Rs 1,840 (Rs 2,000-Rs 160)
Therefore, anount recived on Share Allotment = Rs 90,160 (Rs 1,00,000-8,000-1,840).