Question

M/s Reliable Investment issue a prospectus inviting applications of 4,000 Equity Share of
*20 each at a Premium of 4 per share payable as under :
* on application 4 per share
*on allotment 10 per share (including the Premium)
* on first call 6 per share
Applications were received for 6,000 shares and allotment was made pro-rata to the
applicants of 4,800 shares, the applications for remaining shares being refused. Money
overpaid on application was used on account of sums due on allotment.
Harish to whom 80 shares were allotted, could not pay the allotment money and on his
subsequent failure to pay the first call his shares were forfeited after the First Call.
Mukesh to whom 120 shares were allotted, failed to pay the two Calls and his shares were
forfeited afer the Second Call.
y​

Answer 1

GIVEN: 4,000 shares of Rs.20 each.

TO FIND: Journal Entries
SOLUTION:

According to the question,

The applications were received for 6,000 shares.

Therefore, Shares were allotted on a pro-rata basis.

The Journal Entries will be as follows,
Shares Allotment A/c (4,000 × 10)              ...Dr.       40,000

          To  Share Capital A/c (4,000 × 6)                                           24,000

          To  Securities Premium Reserve A/c (4,000 × 4)                  16,000

(Being the allotment due on 4,000 shares)

Bank A/c                                              ...Dr.       36,064

Calls-in Arrears A/c                             ...Dr.         736

          To  Shares Allotment A/c                                            36,800

(Being the amount received except on 80 shares)

Shares First Call A/c (4,000 × 6)                ...Dr.       24,000

            To  Share Capital A/c                                               24,000

 (Being the first call due)

Bank A/c                                         ...Dr.       22,800

Calls-in-Arrears A/c                             ...Dr.        1,200

            To  Shares First Call A/c                                           24,000

(Being the first call money received except on 200 shares)

Share Capital A/c                                ...Dr.        1,280

Securities Premium Reserve A/c                   ...Dr.         320

            To  Forfeited Shares A/c (96 × 4)                                   384

            To  Calls-in-Arrears A/c [736 + (80 × 6)]                        1,216

(Being 80 shares forfeited for non-payment of allotment and first call)

Shares Second and Final Call A/c                 ...Dr.       15,680

              To  Share Capital A/c                                               15,680

 (Being the second and final call due on 3,920 shares 4 each)

Bank A/c                                         ...Dr.       15,200

Call-in-Arrears A/c                              ...Dr.         480

               To  Shares Second and Final Call A/c                                15,680

(Being the second and final call received except on 120 shares)

Share Capital A/c                                ...Dr.        2,400

               To  Forfeited Shares A/c                                             1,200

               To  Calls-in-Arrears A/c                                             1,200

(Being 120 shares forfeited for non-payment of first and second and final call)

Bank A/c                                         ...Dr.        2,880

Forfeited Shares A/c                             ...Dr.         320

                To  Share Capital A/c                                                3,200

(Being 160 shares out of 200 forfeited shares reissued 18 per share)

Forfeited Shares A/c                             ...Dr.         864

To  Capital Reserve A/c                                               864

(Being the gain on 160 reissued shares transferred to Capital Reserve)

#SPJ1