Question

Bharat Ltd. invited applications for issuing 2,00,000 Equity Shares of ₹ 10 each. The amount was payable as:
On application ₹ 3 per share, on allotment ₹ 5 per share and on first and final call ₹ 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis.
Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Sharma, who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call. His shares were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ ₹ 8 per share. The reissued shares included all the forfeited shares of Bajaj.
Give necessary journal entries to record the above transactions.

Answer 1

The necessary journal entries to record the above transactions are prepared below:

Explanation:

Issued Capital 2,00,000 shares of Rs.10 each

Applied shares 3,00,000

Calculation Of Bajaj Share

No. of shares applied

$=\frac{\text { Applicaion }}{\text { Allotment }} \times Bajaj Allotted$

$=\frac{2,00,000}{1,50,000} \times 3,000=4,000 \quad shares$

Calculation Of Sharma Shares

No, of shares allotted

$=\frac{\text { Allotment }}{\text { Applicaion }} \times Sharma Allotted$

$=\frac{50,000}{1,00,00} \times 2,000=1,000 \quad shares$

Calculation Of Capital Reserve

Capital Reserve

Capital Reserve on re -issue of 500 Shares of Sharma (re-issued shares)

$=\mathrm{Rs} .6 \times 500=\mathrm{Rs} .3,000$

Total Capital Reserve on 3,500 shares = Re-issued shares of Bajaj's + Re-issued shares of sharma's

$=6,000+3,000=R s .9,000$