x Ltd issued for public subscription 40,000 equity shares of ₹ 10 each at a premium of ₹2 share payable as under , on application ₹ 4 per share;
on allotment ₹ 5 per share (including premium) and on call ₹ 3 per share
applications were received for 60,000 shares. allotment was made pro-rata to the applicants for 48,000 shares, the remaining applications being refused money over paid on application was utilised towards sums due on allotment.
Shri Manoj, to whom 1,500 shares were allotted failed to pay the allotment and call money and
Shri Hussain to whom 2,000 shares were allotted failed to pay
the call money
Answers
Call Values = Application 4, Allotment 3+2, Call 3
Note 1: Pro-rata ratio = 48:40 = 6:5
Share Application Entries
Bank A/c Dr. (60,000 x 4) 2,40,000
To Share Application A/c (60,000 x 4) 2,40,000
(Being application money on 60,000 shares @ 4 per share received)
Share Application A/c Dr. (60,000 x 4) 2,40,000
To Share Capital A/c (40,000 x 4) 1,60,000
To Share Allotment A/c (8,000 x 4 or 40,000 x 0.8) 32,000
To Bank A/c (12000 x 4) 48,000
(Being application money due, transferred to share capital account, Share allotment A/c and refund on 12,000 shares)
Share Allotment Entries
Share Allotment A/c Dr. (40,000 x 5) 2,00,000
To Share Capital A/c (40,000 x 3) 1,20,000
To Securities Premium A/c (40,000 x 2) 80,000
(Being allotment money due on 40,000 shares @ 3 per share transferred to share capital account and @ 2 per share transferred to Securities Premium A/c)
Bank A/c Dr. (40,000 x 5 – 32,000 – 6,300) 1,61,700
Calls in Arrears A/c Dr. (1,500 x 5) 6,300
To Share Allotment A/c (40,000 x 4.2) 1,68,000
(Being allotment money on 40,000 shares excluding 1,500 shares of Mr. Manoj received @ 4.2 per share since 0.8 is paid and credited in advance)
Note 2: Manoj had 1500 shares which means he had applied for 1500 x (6÷5) shares
=1800 shares so
Excess paid by Manoj = 300 x 4 = 1,200
Due from Manoj = 7,500 – 1,200 = 6,300
Share First & Final Call Entries
Share First & Final call A/c Dr. (40,000 x 3) 1,20,000
To Share Capital A/c (40,000 x 3) 1,20,000
(Being First & Final call money due on 40,000 shares @ 3 per share due and transferred to share capital account)
Bank A/c Dr. (40,000 x 3 – 10,500) 1,09,500
Calls in Arrears A/c Dr. (3,500 x 3) 10,500
To Share First & Final call A/c (40,000 x 3) 1,20,000
(Being First & Final call money @ 3 per share received excluding on 3500 shares)
Note 3: Manoj and Hussain together holding 1500 + 2000 shares failed to pay call money
Not received on Call =3500 x 3
=10,500