Question

Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹ 10 each, issued the entire amount of the shares payable as:
₹ 5 on application (including premium ₹ 2 per share),
₹ 4 on allotment, and
₹ 3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on which the allotment money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7 per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.

Answer 1

The journal entries (including cash transactions) and the balance Sheet are calculated and prepared below:

Explanation:

Authorised Capital 20,000 shares of Rs.10 each

Issued and Applied 20,000 shares of Rs.10 each at a premium Rs. 2

Payable as:

• On Application $(3+2) = Rs. 5$
• On Allotment = Rs. 4
• On First Call and Final Call = Rs. 3

Total Called-up (10+2) = Rs. 12

Calculation of Total Balance of Share Forfeiture

Capital Reserve of 200 shares on which only application received

Share Forfeiture Cr. per share (excluding premium) = Rs.3

Share Forfeiture Dr. per share = Rs. 3

Balance of Share Forfeiture = Cr. - Dr. = Rs. 3 - Rs. 3 = NIL

Capital Reserve of 200 shares on which only application and allotment received

Share Forfeiture Cr per share (excluding premium) - Rs. 7

Share Forfeiture Dr. per share - Rs. 3

Balance of Share Forfeiture = Cr. - Dr. = Rs. 7 - Rs. 3 = Rs. 4

Calculation of Capital Reserve

Capital Reserve $=200 Shares \times$ Balance of Share Forfeiture Cr. per share

Capital Reserve

$=200 \times R s .4=R s .800$