Question

22. Malabar Ltd. invited applications for issuing 75,000 e
Ltd. invited applications for issuing 75,000 equity shares of 7 10 each at a premium of 20%.
The amount was payable as follows:
On Application 2 per share
On Allotment 5 per share (including premium)
On First and final call balance amount.

Applications were received for 1,50,000 shares. Applications for 25,000 shares were rejected and
application money of these applicants was refunded. Shares were allotted on pro-rata basis to the
remaining applicants. Excess money received with applications was adjusted towards sum due on
allotment. Rama who had applied for 1,250 shares, failed to pay allotment and call money and Kriti
failed to pay first and final call on her 1,000 shares. All these shares were forfeited. 1,000 shares out
of forfeited shares were reissued @ 37 per share fully paid up, including all shares of Rama.
Pass necessary journal entries in the books of the company for the above transactions.​

Answer 1

Journal Entries for the above transactions

Explanation:

                                               In the Books of Malabar ltd.

Journal Entries:

• Bank A/c             Dr. Rs.300000

               To Share Application A/c      Rs.300000

      (Being application money received on 1,50,000 shares)

• Share Application A/c     Dr. Rs.300000

                       To Share Capital A/c    Rs.150000

                       To Share Allotment A/c Rs.100000

                       To Bank A/c                    Rs.5000    

    (Being share application money transferred to SC and Share allotment A/c)

• Share Allotment A/c           Dr. Rs.525000

                To Share Capital A/c                       Rs.375000

                To Security Premium Reserve A/c Rs.150000

     (Being share allotment money due on 75000 shares)

• Bank A/c               Dr. Rs.420750

                 To Share Allotment A/c       Rs.420750

 (Being Allotment money received except for 750 shares)

• Share First and Final Call A/c Dr. Rs.225000

                   To Share Capital A/c                Rs.225000

   (Being call money due on 75000 shares)

• Bank A/c             Dr. Rs.219000       $[75000\times3 - (75000+1250)\times3]$

                   To Share First and Final Call A/c    Rs.219000

   (Being call money received except on 750 shares of Rama and 1250 shares of Kriti)

• Share Capital A/c          Dr. Rs.20000

       SPR A/c                          Dr. Rs.1500

                 To Share Forfeiture A/c       Rs.11250

                 To Share Allotment A/c        Rs,4250

                 To Share First and Final Call A/c Rs.6000

  (Being 2000 shares forfeited)

• Bank A/c        Dr. Rs.7000

       Share Forfeiture A/c Dr. Rs.3000

                     To Share Capital A/c        Rs.10000

 (Being 1000 shares reissued @Rs.7 per share)

• Share Forfeiture A/c     Dr. Rs.1250

                 To Capital Reserve A/c    Rs.1250

  (Being profit on forfeiture transferred to capital reserve)