Question

H Limited issued a prospectus inviting applications for 20,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as follows:
On application ₹ 2 ; on allotment ₹ 5 (including premium) ; on first call ₹ 3 ; on second and final call ₹ 2.
Applications were received for 30,000 shares and pro rata allotment was made on the applications for 24,000 shares. Money overpaid on applications was adjusted against amount due on allotment.
Ramesh, to whom 400 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay first call his shares were forfeited . Mohan, the holder of 600 shares, failed to pay two calls and his shares were forfeited after the second call.
Of the shares forfeited, 800 shares were sold to Krishna credited as fully paid-up for ₹ 9 per share, the whole of Ramesh’s shares being included.
Pass journal entries and prepare the Balance Sheet.

Answer 1

The journal entries and the Balance Sheet are prepared and calculated below:

Explanation:

Calculation of Allotment Money Received

Shares Alloted to Ramesh $=400$

Shares applied by Ramesh

$=400 \times \frac{24,000}{20,000}=480$

Excess application money received

$=\mathrm{Rs} .160(80 \times \mathrm{Rs} .2)$

Allotment money due from Ramesh

$=\mathrm{Rs} .2,000(400 \times \mathrm{Rs} .5)$

Amount not received from Ramesh

$=(2,000-160)=\mathrm{Rs} .1,840$

Calculation of Capital Reserve

Share Forfeiture (400 shares of Ramesh)

$=\mathrm{Rs} .960$

Share Forfeiture ( 600 shares of Mohan)

$=\mathrm{Rs} .3,000$

Share Forfeiture of 400 shares of Mohan

$=\frac{3,000}{600} \times 400=2,000$

Balance in Share Forfeiture Cr.

$=\mathrm{Rs} .2,960$

Balance in Share Forfeiture Dr.

$=\mathrm{Rs} .800$

Capital Reserve = Balance in Share Forfeiture Cr. - Balance in Share Forfeiture Dr.

$=2,960-800=\mathrm{Rs} .2,160$

Answer 2

Answer:

Calculation of Allotment Money Received

Shares Alloted to Ramesh =400=400

Shares applied by Ramesh

=400 \times \frac{24,000}{20,000}=480=400×

20,000

24,000

=480

Excess application money received

=\mathrm{Rs} .160(80 \times \mathrm{Rs} .2)=Rs.160(80×Rs.2)

Allotment money due from Ramesh

=\mathrm{Rs} .2,000(400 \times \mathrm{Rs} .5)=Rs.2,000(400×Rs.5)

Amount not received from Ramesh

=(2,000-160)=\mathrm{Rs} .1,840=(2,000−160)=Rs.1,840

Calculation of Capital Reserve

Share Forfeiture (400 shares of Ramesh)

=\mathrm{Rs} .960=Rs.960

Share Forfeiture ( 600 shares of Mohan)

=\mathrm{Rs} .3,000=Rs.3,000

Share Forfeiture of 400 shares of Mohan

=\frac{3,000}{600} \times 400=2,000=

600

3,000

×400=2,000

Balance in Share Forfeiture Cr.

=\mathrm{Rs} .2,960=Rs.2,960

Balance in Share Forfeiture Dr.

=\mathrm{Rs} .800=Rs.800

Capital Reserve = Balance in Share Forfeiture Cr. - Balance in Share Forfeiture Dr.

=2,960-800=\mathrm{Rs} .2,160=2,960−800=Rs.2,160