VXN Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at a premium of ₹ 8 per share. The amount was payable as follows:
The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal’s shares were immediately forfeited after allotment. Afterwards, the first call was made. Krishna, a holder of 100 shares failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna’s shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received. All the forfeited shares were reissued at ₹ 9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.
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Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna’s shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received. All the forfeited shares were reissued at ₹ 9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.
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The necessary journal entries are prepared below:
Explanation:
Bank A/c - Rs. 2,00,000 - To Equity Share Application A/c
(Application money received on 50,000 shares)
Equity Share Application A/c - Rs. 2,00,000
To Equity Share Capital A/c - Rs. 1,00,000
To Securities Premium Reserve A/c - Rs. 1,00,000
(Application money transferred to Share Capital)
Equity Share Allotment A/c - Rs. 3,00,000
To Equity Share Capital A/c - Rs. 1,50,000
To Securities Premium Reserve A/c - Rs. 1,50,000
(Allotment money due on 50,000 shares)
Bank A/c- Rs. 3,02,000
To Equity Share Allotment A/c- Rs. 2,98,800
To Calls-in-Advance A/c - Rs.3,200
(Allotment money received)
Equity Share Capital A/c - Rs. 1000
Securities Premium Reserve A/c - Rs. 600
To Equity Share Allotment A/c - Rs. 1200
To Equity Share Forfeiture A/c - Rs. 400
(200 shares forfeited for non-payment of allotment money including premium of Rs.3)
Equity Share First Call A/c - Rs. 2,49,000
To Equity Share Capital A/c - Rs. 1,99,200
To Securities Premium Reserve A/c -Rs. 49,800
(Call money due on 49,800 shares)
Bank A/c - Rs. 2,47,400
Calls-in-Advance A/c - Rs.2000
To Calls-in-Advance A/c - Rs. 900
To Equity Share First Call A/c - Rs. 2,48,500
(Call money received)
Equity Share Capital A/c - Rs. 900
Securities Premium Reserve A/c - Rs. 100
To Equity Share First Call A/c - Rs. 500
To Equity Share Forfeiture A/c - Rs. 500
(100 shares forfeited for non-payment of call money)
Equity Share Second and Final Call A/c - Rs. 1,49,100
To Equity Share Capital A/c - Rs. 49,700
To Securities Premium A/c - Rs. 99,400
(Call money due on 49,700 shares)
Bank A/c - Rs. 1,47,000
Calls-in-Advance A/c - Rs. 2,100
To Equity Share Second and Final Call A/c - Rs. 1,49,100
(Call money received on shares)
Bank A/c - Rs. 2700
Equity Share Forfeiture A/c - Rs. 300
To Equity Share Capital A/c - Rs. 3000
(300 shares re-issued at Rs.9 per share)
Equity Share Forfeiture A/c - Rs. 600 - To Capital Reserve A/c
(Profit on re-issue transferred to Capital Reserve)
