Question

XYZ Ltd. invited applications for issuing 50,000 Equity Shares of ₹10 each. The amount was payable as:
Applications were received for 75,000 shares and pro rata allotment was made as:
Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis.
Applicants for 35,000 shares were allotted 30,000 shares on pro rata basis.
Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment.
Shamu, who had applied for 700 shares out of the group applying for 35,000 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. 8 per share as fully paid-up. The reissued shares included all the forfeited shares of Shamu.
Pass necessary Journal entries to record the above transactions.

Answer 1

The necessary Journal entries to record the given transactions are prepared below:

Explanation:

Issued 1,000 equity Share of Rs.10 each

Applied 1,800 shares

Rumu's Share

No. of shares applied

$=\frac{\text { Applicaion }}{\text { Allotment }} \times RamuAllotted$

$=\frac{40,000}{30,000} \times 1,200=1,600 \quad shares$

Shamu's Shares

No. of shares alloted to

$=\frac{\text { Allotment }}{\text { Applicaion }} \times Shamu Allotted$

$=\frac{20,000}{35,000} \times 700=400 \quad shares$

First and Final Call

First and Final Call due

$=(48,800 \times \mathrm{Rs} .3)=Rs.1,46,400$

Less: Calls-in-Arrears by Shamu

$(400 shares \times \mathbf{R s .} .3 ) = Rs.1200$

Money received on of First and Final Call - Rs. 1,45,200

Calculation Capital Reserve

Capital Reserve

Shares reissued out the shares forfeited from Ramu

=1,000 shares - Shamu's shares

$=1,000-400$

$=600$ shares on re-issue Ramu's shares

Capital Reserve after re-issue of 400 shares

= Share Forfeiture after re-issue (per share) $\times 600$ shares

$=R s .5 \times 400=R s .2,000$

Total amount of Capital Reserve

= Capital Reserve of 600 Shares + Capital Reserve of 400 shares

$=R s .1,200+R s .2,000=R s .3,200$

Answer 2

The necessary Journal entries to record the given transactions are prepared below:

Explanation:

Issued 1,000 equity Share of Rs.10 each

Applied 1,800 shares

Rumu's Share

No. of shares applied

=\frac{\text { Applicaion }}{\text { Allotment }} \times RamuAllotted=

Allotment

Applicaion

×RamuAllotted

$=\frac{40,000}{30,000} \times 1,200=1,600 \quad shares

Shamu's Shares

No. of shares alloted to

$=\frac{\text { Allotment }}{\text { Applicaion }} \times Shamu Allotted

$=\frac{20,000}{35,000} \times 700=400 \quad shares

First and Final Call

First and Final Call due

=(48,800 \times \mathrm{Rs} .3)=Rs.1,46,400=(48,800×Rs.3)=Rs.1,46,400

Less: Calls-in-Arrears by Shamu

(400 shares $\times \mathbf{R s .} .3$ ) = Rs.1200

Money received on of First and Final Call - Rs. 1,45,200

Calculation Capital Reserve

Capital Reserve

Shares reissued out the shares forfeited from Ramu

=1,000 shares - Shamu's shares

=1,000-400=1,000−400

=600=600 shares on re-issue Ramu's shares

Capital Reserve after re-issue of 400 shares

= Share Forfeiture after re-issue (per share) \times 600×600 shares

=R s .5 \times 400=R s .2,000=Rs.5×400=Rs.2,000

Total amount of Capital Reserve

= Capital Reserve of 600 Shares + Capital Reserve of 400 shares

=R s .1,200+R s .2,000=R s .3,200=Rs.1,200+Rs.2,000=Rs.3,200