Ruchi Ltd. issued for public subscription 40,000 Equity Shares of 10 each at a premium of 20
payable as:
On application
*2 per share,
On allotment
5 per share (including premium),
On first call
*2 per share,
On second and final call
3 per share.
Applications were received for 60,000 shares. Allotment was made on pro rata basis to the applicants
for 48,000 shares, the remaining applications being refused. Money overpaid on application was utilised
towards sums due on allotment. Ram to whom 1,600 shares were allotted failed to pay the allotment
money and Shyam to whom 2,000 shares were allotted failed to pay the two calls. These shares were
subsequently forfeited after the second and final call was made. All the forfei
fully paid-up @ 8 per share.
Give necessary Journal entries for the above transactions.
[Ans.: Capital Reserve—6,640.]
Answers
Journal Entries for the given transactions
Explanation:
In the Books of Ruchi ltd.
Calculation of Shares Allotted:
Allotment made can be shown as:
Applied Allotted
48000 - 40000
12000 - NIL
60000 60000
Journal:
Bank A/c Dr. Rs.120000
To Equity share application A/c Rs.120000
(Being application money received in bank)
Equity Share Application A/c Dr. Rs.120000
To Equity Share Capital A/c Rs.80000
To Equity Share Allotment A/c Rs.16000
To Bank A/c Rs.24000
(Being application shares transferred to equity shares and remaining refunded)
Equity Share Allotment A/c Dr. Rs.200000
To ESC A/c Rs.120000
To Security Premium Reserve A/c Rs.80000
(Being equity shares allotted and premium transferred)
Bank A/c Dr. Rs.176640
To Equity Share Allottment A/c Rs.176640
(Being share allotment money received except on 1600 shares)
Equity share First Call A/c Dr. Rs.80000
To ESC A/c Rs.80000
(Being first call money due on 40000 shares)
Bank A/c Dr. Rs.72800
To ES First Call A/c Rs.72800
(Being first call money received except on 3600 shares)
ES Second and Final Call A/c Dr. Rs.120000
To ESC A/c Rs.120000
(Being second and final call due on 40000 shares)
Bank A/c Dr. Rs.109200
To ES Second and Final Call A/c Rs.109200
(Being second and final call received except on 3600 shares)
ESC A/c Dr. Rs.16000
SPR A/c Dr. Rs.3200
To Share Forfeiture A/c Rs.3840
To ES Allotment A/c Rs.7360
To ES Final Call A/c Rs.3200
To ES Second and Final Call A/c Rs.4800
(Being 1600 shares forfeited)
ESC A/c Dr. Rs.20000
To ES Forfeiture A/c Rs.10000
To ES First Call A/c Rs.4000
To ES Second and Final Call A/c Rs.6000
(Being 2000 shares forfeited for non-payment)
Bank A/c Dr. Rs.28800
Share Forfeiture A/c Dr. Rs.7200
To ESC A/c Rs.36000
(Being 3600 shares reissued)
Share Forfeiture A/c Dr. Rs.6640
To Capital Reserve A/c Rs.6640
(Being balance in share forfeiture transferred to Capital Reserve A/c)
Journal Entries for the given transactions
Explanation:
In the Books of Ruchi ltd.
Calculation of Shares Allotted:
Allotment made can be shown as:
Applied Allotted
48000 - 40000
12000 - NIL
60000 60000
Journal:
Bank A/c Dr. Rs.120000
To Equity share application A/c Rs.120000
(Being application money received in bank)
Equity Share Application A/c Dr. Rs.120000
To Equity Share Capital A/c Rs.80000
To Equity Share Allotment A/c Rs.16000
To Bank A/c Rs.24000
(Being application shares transferred to equity shares and remaining refunded)
Equity Share Allotment A/c Dr. Rs.200000
To ESC A/c Rs.120000
To Security Premium Reserve A/c Rs.80000
(Being equity shares allotted and premium transferred)
Bank A/c Dr. Rs.176640
To Equity Share Allottment A/c Rs.176640
(Being share allotment money received except on 1600 shares)
Equity share First Call A/c Dr. Rs.80000
To ESC A/c Rs.80000
(Being first call money due on 40000 shares)
Bank A/c Dr. Rs.72800
To ES First Call A/c Rs.72800
(Being first call money received except on 3600 shares)
ES Second and Final Call A/c Dr. Rs.120000
To ESC A/c Rs.120000
(Being second and final call due on 40000 shares)
Bank A/c Dr. Rs.109200
To ES Second and Final Call A/c Rs.109200
(Being second and final call received except on 3600 shares)
ESC A/c Dr. Rs.16000
SPR A/c Dr. Rs.3200
To Share Forfeiture A/c Rs.3840
To ES Allotment A/c Rs.7360
To ES Final Call A/c Rs.3200
To ES Second and Final Call A/c Rs.4800
(Being 1600 shares forfeited)
ESC A/c Dr. Rs.20000
To ES Forfeiture A/c Rs.10000
To ES First Call A/c Rs.4000
To ES Second and Final Call A/c Rs.6000
(Being 2000 shares forfeited for non-payment)
Bank A/c Dr. Rs.28800
Share Forfeiture A/c Dr. Rs.7200
To ESC A/c Rs.36000
(Being 3600 shares reissued)
Share Forfeiture A/c Dr. Rs.6640
To Capital Reserve A/c Rs.6640
(Being balance in share forfeiture transferred to Capital Reserve A/c)