Zocon Ltd. issued a prospectus inviting applications for 5,00,000 equity shares of 10 each issued at a premium of
10% payable as:
3 on Application
5 on Allotment (including premium)
and '3 on call.
Applications were received for 6, 60,000 shares.
Allotment was made as follows:
(a) Applicants of 4,00,000 shares were allotted in full.
(b) Applicants of 2,00,000 shares were allotted 50% on pro rata basis.
(c) Applicants of 60,000 shares were issued letters of regret.
A shareholder to whom 500 shares were allotted under category (a) paid full amount on shares allotted to him
along with allotment money. Another shareholder to whom 1,000 shares were allotted under category (b) failed
to pay the amount due on allotment. His shares were immediately forfeited. These shares were then reissued at
14 per share as "7 paid up. Call has not yet been made.
Journalise.
Or
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Answer:
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The journal entries for the given transactions are as follows:
On receiving applications:
Bank A/c Dr. 19,80,000
To Share Application A/c 19,80,000
(Being applications received for 6,60,000 shares)
On allotment to applicants of 4,00,000 shares:
Share Application A/c Dr. 40,00,000
Share Allotment A/c Dr. 20,00,000
Securities Premium A/c Dr. 4,00,000
To Equity Share Capital A/c 50,00,000
(Being allotment made to applicants of 4,00,000 shares)
On allotment to applicants of 2,00,000 shares:
Share Application A/c Dr. 20,00,000
Share Allotment A/c Dr. 10,00,000
Securities Premium A/c Dr. 2,00,000
To Equity Share Capital A/c 32,00,000
(Being allotment made to applicants of 2,00,000 shares on pro-rata basis)
On issuing letters of regret:
Share Application A/c Dr. 6,00,000
To Bank A/c 6,00,000
(Being share application money refunded to applicants)
On receipt of payment from shareholder allotted 500 shares:
Bank A/c Dr. 6,500
Share Allotment A/c Dr. 5,000
Securities Premium A/c Dr. 1,000
To Equity Share Capital A/c 12,500
(Being payment received on shares allotted to a shareholder)
On forfeiture of shares allotted to a shareholder:
Share Allotment A/c Dr. 5,000
Share Forfeiture A/c Dr. 5,000
To Equity Share Capital A/c 10,000
(Being shares forfeited and reclassified as capital liability)
On reissue of forfeited shares:
Bank A/c Dr. 7,000
Share Forfeiture A/c Dr. 3,000
To Equity Share Capital A/c 10,000
(Being forfeited shares reissued at a premium of 4 per share)
Note: The entry for the call money to be received in the future has not been made as per the given information.
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