Question

XYZ Ltd. is registered with an authorised capital of ₹ 2,00,000 divided into 2,000 shares of ₹ 100 each of which 1,000 shares were offered for public subscription at a premium of ₹ 5 per share, payable as:
Applications were received for 1,800 shares, of which applications for 300 shares were rejected outright; the rest of the application were allotted 1,000 shares on pro rata basis. Excess application money was transferred to allotment.
All the money was duly received except from Sundar, holder of 100 shares, who failed to pay allotment and first call money. His shares were later forfeited and reissued to Shyam at ₹ 60 per share ₹ 70 paid-up. Final call has not been made.
Pass necessary Journal entries and prepare Cash Book in the books of XYZ Limited.

Answer 1

The necessary Journal entries and the Cash Book in the books of XYZ Limited are prepared below:

Explanation:

Authorised capital 2,000 shares of Rs.100 each

Issued 1,000 shares of $\mathrm{Rs} .100$ each at a premium of $\mathrm{Rs.} .5$

Applied 1,800 shares

Calculation of number of shares

Number of share applied by Sunder

$=\frac{1,500}{1,000} \times 100=150\quad shares$

On Account of Sunder

Excess Money on application - Rs. 500

Calls-in-Arrears on Allotment - Rs. 2000

Money received on allotment - Rs. 18,000

Calculation of Capital Reserve

Capital Reserve = Share Forfeiture (Cr.) - Share Forfeiture (Dr.)

$=1,500-1,000=\mathrm{Rs} .500$