Q. 41. X Ltd. offered 25,000 shares of 100 each payable as 25 on application,
520 on allotment, 30 on first call and the balance on final call.
Applications were received for 40,000 shares out of which shares were allotted to
the applicants for 35,000 shares on a pro-rata basis. All shareholders paid the allotment
money excepting Mr. Gopal who was allotted 500 shares. These shares were forfeited
immediately. The first call was made thereafter. The forfeited shares were re-issued
@ 378 per share 75 paid up. The final call was not made.
Prepare Cash Book and pass journal entries.
Answers
Share Applications = 40,000
Pro-rata applicants = 35,000
Pro-rata shares = 25,000
Ro-rata ratio = Pro-rata applicants : Pro-rata shares = 35:25 = 7: 5
Cash Book of X Ltd.
Particulars Amount Particulars Amount
To Share Application A/c
(40,000 x 25) 10,00,000 By Share Application A/c
(5,000 x 25) 1,25,000
To Share Allotment A/c
(24,500 x 10) 2,45,000 By Balance c/d 18,94,000
To Share First call A/c
(24,500 x 30) 7,35,000
To Share Capital A/c
(500 x 75) 37,500
To Securities Premium A/c
(500 x 3) 1,500
20,19,000 20,19,000
Share Application Entries
Bank A/c Dr. (40,000 x 25) 10,00,000
To Share Application A/c (40,000 x 25) 10,00,000
(Being application money on 40,000 shares @ 25 per share received)
Share Application A/c Dr. (40,000 x 25) 10,00,000
To Share Capital A/c (25,000 x 25) 6,25,000
To Share Allotment A/c (10,000 x 25) 2,50,000
To Bank A/c (5000 x 25) 1.25,000
(Being the transfer of application money, to share capital account, Share allotment A/c and refund on 5,000 shares)
In the above entry 25,000 shares have paid Rs.10 advance per share which is transferred to share allotment and needs to be adjusted.
Share Allotment Entries
Share Allotment A/c Dr. (25,000 x 20) 5,00,000
To Share Capital A/c (25,000 x 20) 5,00,000
(Being the transfer of allotment money due on 25,000 shares @ 20 per share to share capital account)
Bank A/c Dr. (24,500 x 10) 2,45,000
Calls in Arrears A/c Dr. (500 x 10) 5,000
To Share Allotment A/c (25,000 x 10) 2,50,000
(Being allotment money on 25,000 shares received @ 20 per share excluding 500 shares of Mr. Gopal)
Share Forfeiture Entries
Share Capital A/c Dr. (500 x 45) 22,500
To Share Forfeiture A/c (500 x 35) 17,500
To Calls in Arrears A/c (500 x 10) 5,000
(Being 500 shares forfeited at called up value with share forfeiture a/c showing paid up and calls in arrears showing amount unpaid from called up value)
Share First Call Entries
Share First call A/c Dr. (24,500 x 30) 7,35,000
To Share Capital A/c (24,500 x 30) 7,35,000
(Being first call money on 24,500 shares @ 30 per share due and transferred to share capital account)
Bank A/c Dr. (24,500 x 30) 7,35,000
To Share First call A/c (24,500 x 30) 7,35,000
(Being first call money on 24,500 shares @ 30 per share received)
Share re-issue Entries
Bank A/c Dr. (500 x 78) 39,000
To Share Capital A/c (500 x 75) 37,500
To Securities Premium A/c (500 x 3) 1,500
(Being 500 shares re-issued @ 78 per share and money received adjusted to share capital account and Securities Premium A/c)
Share Forfeiture A/c Dr. (500 x 35) 17,500
To Capital Reserve A/c (500 x 35) 17,500
(Being excess amount received on 500 shares forfeiture adjusted to capital reserve)
Amount transferred to Capital Reserve = Rs.17,500
Explanation:
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