Midee Ltd. invited applications for issuing 27,000 shares of ₹ 100 each payable as follows:
₹ 50 per share on application;
₹ 10 per share on allotment; and
Balance on First and Final call.
Applications were received for 40,000 shares. Full allotment was made to the applicants of 7,000 shares. The remaining applicants were allotted 20,000 shares on pro rata basis. Excess money received on applications was adjusted towards allotment and call.
Asha, holding 600 shares was belonged to the category of applicants to whom full allotment was made, paid the call money at the time of allotment. Ankur, who belonged to the category of applicants to whom shares were allotted on pro rata basis did not pay anything after application on his 200 shares. Ankur’s shares were forfeited after the First and Final call. These shares were later reissued at ₹ 105 per share as fully paid-up.
Pass necessary journal entries in the books of Midee Ltd. for the above transactions, by opening Calls-in-Arrears and Calls-in-Advance Accounts wherever necessary.
Answers
The necessary journal entries in the books of Midee Ltd are prepared below:
Explanation:
Bank A/c - Rs. 20,00,000 - To Equity Share Application A/c
(Application money received on 40,000 shares)
Equity Share Application A/c - Rs. 20,00,000
To Equity Share Capital A/c - Rs. 13,50,000
To Calls in Advance A/c - Rs. 6,50,000
(Application money transferred to Share Capital)
Equity Share Allotment A/c - Rs. 2,70,000 - To Equity Share Capital A/c
(Allotment money due)
Bank A/c - Rs. 94,000
Calls in Advance A/c - Rs. 2,00,000
To Equity Share Allotment A/c - Rs. 2,70,000
To Calls-in-Advance A/c - Rs. 24,000
(Allotment money received)
Equity Share First Call A/c - Rs. 10,80,000 - To Equity Share Capital A/c
(Call money due)
Bank A/c - Rs. 6,26,500
Calls-in-Advance A/c - Rs. 4,50,000
Calls-in-Arrears A/c - Rs. 3,500
To Equity Share First Call A/c - Rs. 10,80,000
(Call money received)
Equity Share Capital A/c- Rs. 20,000
To Equity Share First Call A/c - Rs. 3,500
To Equity Share Forfeiture A/c - Rs. 16,500
(200 shares forfeited for non-payment of call money)
Bank A/c - Rs. 21,000
To Equity Share Capital A/c - Rs. 20,000
To Securities Premium A/c - Rs. 1,000
(200 shares re-issued at Rs.105 per share)
Equity Share Forfeiture A/c - Rs. 16,500 - To Capital Reserve A/c
(Profit on re-issue transferred to Capital Reserve)
