Question

Reliance Limited issued a prospectus inviting applications for 20,000 shares of ₹10 each at a premium of ₹2 per share payable as follows:
On Application:₹2
On Allotment:₹5 (Including premium)
On First Call:₹3
On second and final call:₹2
Applications were revived for 30,000 shares and pro rata allotment was made on the application for 24,000 shares. Money overpaid on applications was employed on account of some due allotment. Ramesh to whom 400 shares were allotted failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited. Mohan the holder of 600 shares, failed to pay the two calls and his share were forfeited after the second call. Out of the forfeited shares, 800 shares were sold to Krishna credited as fully paid for 9 per share. The whole of Ramesh's shares being included.
Show the Journal entries and the Balance Sheet. ​

Answer 1

Answer:

The journal entries and the Balance Sheet are prepared and calculated below:

Explanation:

Calculation of Allotment Money Received

Shares Alloted to Ramesh

Shares applied by Ramesh

Excess application money received

Allotment money due from Ramesh

Amount not received from Ramesh

Calculation of Capital Reserve

Share Forfeiture (400 shares of Ramesh)

Share Forfeiture ( 600 shares of Mohan)

Share Forfeiture of 400 shares of Mohan

Balance in Share Forfeiture Cr.

Balance in Share Forfeiture Dr.

Capital Reserve = Balance in Share Forfeiture Cr. - Balance in Share Forfeiture Dr.