Q.2
Jain Ltd. Invited applications for issuing 1,12,000 equity shares of Rs. 10 each at par. The amount per
share was payable as follows:
On Application
Rs. 1
On Allotment
Rs. 2
On First call
Rs. 3
On Second and Final call
Rs. 4
Applications for 1,00,000 shares were received. Shares were fully allotted to all the applicants. Ramesh,
who was holding 1,000 shares, failed to pay allotment money. His shares were forfeited immediately.
Suresh did not pay the first call on 500 shares alloted to him. His shares were forfeited after the first call.
The forfeited shares of Ramesh and Suresh were reissued at Rs. 9 per share fully paid-up. Afterwards the
second and final call was made and was duly received.
Pass necessary Journal entries for the above transactions in the books of Jain Ltd.
Answers
Explanation:
Journal entries In the books of Jain Ltd. -
1. Bank A/c Dr. 100000
To Equity Shares application A/c 100000
(Being application money received for 100000 shares)
2. Equity shares application A/c Dr. 100000
To Equity share capital A/C 100000
(Being application money transferred to equity share capital account)
3. Equity share allotment A/C Dr. 200000
To Equity share capital A/C 200000
(Being allotment money due on 100000 shares)
4. Bank A/c Dr. 198000
Calls- in-arrears A/c Dr. 2000
To Equity shares allotment A/c 200000
(Being allotment money received except on Ramesh's 1000 shares)
5. Equity share capital A/c Dr. 3000
To Forfeiture Shares A/c 1000
To Calls-in-arrears A/c 2000
(Being forfeiture of 1000 shares of Suresh for non-payment of allotment money)
6. Equity Shares First Call A/c Dr. 297000
To Equity share capital a/c 297000
( Being first call money due on 99000 shares)
7. Bank A/C Dr. 295500
Calls-in-Arrears A/c Dr. 1500
To Equity shares 297000
(being first call money received except on 500 shares)
8. Equity share capital a/c Dr. 3000
To forfeited shares A/c 1500
To calls-in-arrears a/c 1500
(forfeiture of 500 shares for non-payment of first call money)
9. Bank A/C Dr. 13500
Forfeited Shares A/c Dr. 1500
To Equity Share Capital A/c 15000
(Being 1500 shares of Suresh and Raman are reissued as fully paid-up)
10. Forfeited Shares A/c Dr. 1000
To Capital Reserve A/c 1000
(Being gain on 1500 reissued shares transferred to Capital Reserve)
11. Equity share Second & Final Call A/C Dr. 394000
To Equity Share Capital A/c 394000
(being second and final call received on 98500 shares)
12. Banks A/c Dr. 394000
To Equity share Second & Final Call A/C 394000
(being money received on final call)
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The journal entries for the following data are given below.
Journal entries In the books of Jain Ltd. -
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