Q. 4. Vraj Ltd. issued 40,000 equity shares of 20 each payable as follows:
On Application Rs. 4, On Allotment, Rs.6 On First Call, Rs.6 On Second Call, Rs. 4
The company received applications for 50,000 equity shares. Allotment of shares was made
on pro-rata basis. Share allotment and calls were made and as also received except Ravi holding
1000 shares failed to pay both the calls. His shares were forfeited after second call.
Answers
Answer:
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here ravi holding 1000 shares has failed to pay the two calls that is first call and second call, hence we need to find the calls in arrears.
in this question forfeited shares are not reissued so we left the question upto the entry of forfeiture.
Ravi failed to pay first and second call money on his 1000 shares and these shares were forfeited.
Explanation:
Following are the journal entries in the books of Vraj Ltd:
- Bank a/c dr. 2,00,000
to share application a/c 2,00,000
(being applications received on shares)
- Share application a/c dr. 2,00,000
to share allotment a/c 40,000
to share capital a/c 1,60,000
(being application money transferred to share capital and excess adjusted on allotment)
- Share allotment a/c dr. 2,40,000
to share capital a/c 2,40,000
(being allotment amount due)
- Bank a/c dr. 2,00,000
to share allotment a/c 2,00,000
(being allotment money received)
- Share first call a/c dr. 2,40,000
to share capital a/c 2,40,000
(being first call money due)
- Bank a/c dr. 2,34,000
Calls-in-arrears a/c dr. 6,000
To share first call a/c 2,40,000
(being first call money received and amount not paid on 1000 shares)
- Share second call a/c dr. 1,60,000
to share capital a/c 1,60,000
(being share second call money due)
- Bank a/c dr. 1,56,000
Calls-in-arrears a/c dr. 4,000
to share second call a/c 1,60,000
(being second call money received and amount not paid on 1000 shares)
- Share capital a/c dr. 20,000 (1,000 * 20)
to share forfeiture a/c 10,000
to calls-in-arrears a/c 10,000
(being Ravi's shares forfeited for non-payment of both calls)