VK Ltd issued for public subscription 20,000 shares of Rs.10 each at a premium of
Rs2 per share payable as under:
On Allotment Rs. 2 per share
On Allotment Rs, 3 per share along with full premium
On 1st Call Rs. 2 per share
On Final call Rs. 3 per share
Applications were received for 30,000 shares. Allotment was made pro-rata to the
applicants of 24,000 shares. The remaining applications being refused. Money
overpaid on application was utilized towards sum due on allotment.
Ram to whom 800 shares were allotted,failed to pay allotment money and two
calls.
Shyam to whom 1,000 shares were allotted failed to pay two calls. These shares
subsequently forfeited after the second call was made.. All the forfeited shares were
Re-issued @Rs.8 per shares.
Answers
Answer:
Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under :
With Application
Rs 3 per share
On allotment (including premium)
Rs 5 per share
On First call
Rs 2 per share
On Second and Final call
Rs 2 per share
Applications were received for 1,60,000 shares. Allotment was made on pro-rata basis. Excess money on application was adjusted against the amount due on allotment.
Rohan, whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs 7 per share.
Record journal entries in the books of the company to record these transactions relating to share capital. Also show the company’s balance sheet.
SOLUTION
Books of Himalaya Company Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
Bank A/c
Dr.
4,80,000
To Share Application A/c
4,80,000
(Share Application money received for 1,60,000 shares @ Rs 3 per share)
Share Application A/c
Dr.
4,80,000
To Equity Share Capital A/c
3,60,000
To Share Allotment A/c
1,20,000
(Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)
Share Allotment A/c
Dr.
6,00,000
To Equity Share Capital A/c
3,60,000
To Securities Premium
2,40,000
(Share Allotment due on 1,20,000 shares @ Rs 5 per share including Rs 2 Securities Premium)
Bank A/c
Dr.
4,80,000
To Share Allotment A/c
4,80,000
(Share allotment for 1,20,000 shares @ Rs 5 per share received)
Share First Call A/c
Dr.
2,40,000
To Equity Share Capital A/c
2,40,000
(Share First Call due on 1,20,000 shares @ Rs 2 per share)
Bank A/c
Dr.
2,30,400
To Share First Call A/c
2,30,400
(Share First Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)
Share Final Call A/c
Dr.
2,40,000
To Equity Share Capital A/c
2,40,000
(Share Final call due on 1,20,000 shares @ Rs 2 per share)
Bank A/c
Dr.
2,30,400
To Share Final Call A/c
2,30,400
(Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)
Equity Share Capital A/c (4,800×10)
Dr.
48,000
To Share First Call A/c (4,800×2)
9,600
To Share Final Call A/c (4,800×2)
9,600
To Share Forfeiture A/c (4,800×6)
28,800
(4,800 shares forfeited for the non-payment of First Call and Final Call)
Bank A/c
Dr.
33,600
Share Forfeiture A/c
Dr.
14,400
To Equity Share Capital
48,000
(4,800 shares reissued @ Rs 7 per share, fully paid-up)
Share Forfeiture A/c
Dr.
14,400
To Capital Reserve A/c
14,400
(Share forfeiture balance of 4,800 shares transferred to Capital Reserve Account)
Himalaya Company Limited
Balance Sheet
Particulars
Note No.
Amount
(Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
1
12,00,000
b. Reserves and Surplus
2
2,54,400
2. Non-Current Liabilities
3. Current Liabilities
Total
14,54,400
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents
3
14,54,400
Total
14,54,400
Notes To Accounts
Note No.
Particulars
Amount
(Rs)
1
Share Capital
Authorised Share Capital
…….. shares of Rs 10 each
-
Issued Share Capital
1,20,000 shares of Rs 10 each
12,00,000
Subscribed, Called-up and Paid-up Share Capital
1,20,000 shares of Rs 10 each
12,00,000
2
Reserves and Surplus
Securities Premium
2,40,000
Capital Reserve
14,400
2,54,400
3
Cash and Cash Equivalents
Cash at Bank
14,54,400