Accounting for Share Capital Problems and Solutions
[AHSEC Solved Practical Problems 2012 to 2025]
2025
16. Ayushi Ltd. issued 7,000 equity shares of ₹10 each at a premium of ₹2 per share payable as follows:
8
On Application - ₹3
On Allotment - ₹5 (including premium)
On First and Final Call – ₹4
Applications were received for 11,000 shares. The excess money was refunded and the allotment money was received in full. When the first and final call was made the amount due was received with the exception of 200 shares. These 200 shares were forfeited and subsequently reissued as fully paid up for a consideration of ₹6 per share. Give Journal entries in the books of the company recording the transactions.
Journal Entries
In the books of Ayushi Ltd.
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Bank A/c
Dr.
To Equity Share Application A/c (Being application money received on
11,000 shares @ Rs. 3 each) |
|
33,000 |
33,000 |
|
Equity Share Application A/c Dr. To Equity Share
Capital A/c To Bank A/c (Being application money on 7,000 shares
@ Rs. 3 each transferred to Equity Share Capital Account and excess
application money of 4,000 shares refunded) |
|
33,000 |
21,000 12,000 |
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium Reserve A/c (Being the allotment money due on 7000
shares @ Rs. 5 per share including premium of Rs. 2 per share) |
|
35,000 |
21,000 14,000 |
|
Bank A/c Dr. To Equity Share Allotment A/c (Being the balance allotment money
received) |
|
35,000 |
35,000 |
|
Equity Share First and Final Call
A/c Dr.
To Equity Share Capital A/c (Being first and final call money due on
7000 shares @ Rs. 4 each) |
|
28,000 |
28,000 |
|
Bank A/c
Dr. Calls-in-Arrear A/c Dr. To Equity Share First and Final
Call A/c (Being first and final call money
received on 6800 shares @ Rs. 4 per share. Money not received on 200 shares
has been transferred to Call-in-Arrear Account) |
|
27,200 800 |
28,000 |
|
Equity Share Capital A/c [200 x 10] Dr.
To Calls-in-Arrear A/c
To Forfeited Shares A/c (Being the forfeiture of 200 equity
shares for non-payment of first and final call @ Rs. 4 each) |
|
2,000 |
800 1,200 |
|
Bank A/c [200 x Rs. 6]
Dr. Forfeited Shares A/c [200 x Rs. 4] Dr.
To Equity Share Capital A/c (Being the re-issue of 200 equity shares
of Rs. 10 each @ Rs. 6 per share) |
|
1,200 800 |
2,000 |
|
Forfeited Shares A/c Dr.
To Capital Reserve A/c (Being the profit on re-issue of 200
shares transferred to Capital Reserve Account) |
|
400 |
400 |
2024
16. Anvi Ltd. has issued 10,000 equity shares of Rs. 10 each
at a premium of Rs. 2 each payable as follows: 8
On Application = Rs. 2
On Allotment = Rs. 5 (including premium)
On First and Final Call = Rs. 5
The shares have been fully subscribed, called
up and paid-up except the following:
(a) Allotment and First and Final Call money
on 500 shares
held by Ritu, and
(b) First and Final Call money on 600 shares held by
Jitu.
All these shares have been forfeited and
re-issued at 10%
discount as fully paid.
Give Journal Entries in the books of the
company.
Journal Entries
In the books of Anvi Ltd.
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Bank A/c Dr.
To Equity Share Application A/c (Being application money received on 10,000
shares @ Rs. 2 each) |
|
20,000 |
20,000 |
|
Equity Share Application A/c Dr. To Equity Share
Capital A/c (Being application money on 10,000
shares @ Rs. 2 each transferred to Equity Share Capital Account) |
|
20,000 |
20,000 |
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium Reserve A/c (Being the allotment money due on 10000
shares @ Rs. 5 per share including premium of Rs. 2 per share) |
|
50,000 |
30,000 20,000 |
|
Bank A/c Dr. Calls in Arrear A/c Dr. To Equity Share Allotment A/c (Being the balance allotment money
received on 9500 shares) |
|
47,500 2,500 |
50,000 |
|
Equity Share First and Final Call
A/c Dr.
To Equity Share Capital A/c (Being first and final call money due on
10000 shares @ Rs. 5 each) |
|
50,000 |
50,000 |
|
Bank A/c Dr. Calls-in-Arrear A/c Dr. To Equity Share First and Final
Call A/c (Being first and final call money
received on 8900 shares @ Rs. 5 per share. Money not received on 1100 (500+600) shares has been transferred to
Call-in-Arrear Account) |
|
44,500 5,500 |
50,000 |
|
Equity Share Capital A/c [500 x 10] Dr. Securities Premium Reserve A/c Dr.
To Calls-in-Arrear A/c
To Forfeited Shares A/c (Being the forfeiture of 500 equity
shares for non-payment of allotment money of Rs. 5 including premium of Rs. 2
per share and first and final call @ Rs. 5 each) |
|
5,000 1,000 |
5,000 1,000 |
|
Equity Share Capital A/c [600 x 10] Dr.
To Calls-in-Arrear A/c
To Forfeited Shares A/c (Being the forfeiture of 600 equity
shares for non-payment of first and final call @ Rs. 5 each) |
|
6,000 |
3,000 3,000 |
|
Bank A/c [1100 x Rs. 9]
Dr. Forfeited Shares A/c [1100 x Rs. 1] Dr.
To Equity Share Capital A/c (Being the re-issue of 1100 equity
shares of Rs. 10 each @ Rs. 9 per share) |
|
9,900 1,100 |
11,000 |
|
Forfeited Shares A/c Dr.
To Capital Reserve A/c (Being the profit on re-issue of 1100
shares transferred to Capital Reserve Account) |
|
2,900 |
2,900 |
2023
16. Amlan Co. Ltd. issued 50,000 equity shares of Rs. 10 each at a premium of Rs. 2
each, payable as under: 8
On Application = Rs. 2.
On Allotment = Rs. 5 (including premium).
On First and Final Call = Rs. 5.
The shares were fully subscribed, called up
and paid-up except
allotment and call money on 500 shares.
These shares were forfeited. Give journal entries in the books of the company.
Journal Entries
In the books of Amlan Co. Ltd.
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Bank A/c Dr.
To Equity Share Application A/c (Being application money received on 50,000
shares @ Rs. 2 each) |
|
1,00,000 |
1,00,000 |
|
Equity Share Application A/c Dr. To Equity Share
Capital A/c (Being application money on 50,000
shares @ Rs. 2 each transferred to Equity Share Capital Account) |
|
1,00,000 |
1,00,000 |
|
Equity Share Allotment A/c Dr.
To Equity Share Capital A/c To Securities Premium Reserve A/c (Being the allotment money due on 50000
shares @ Rs. 5 per share including premium of Rs. 2 per share) |
|
2,50,000 |
1,50,000 1,00,000 |
|
Bank A/c Dr. Calls in Arrear A/c Dr. To Equity Share Allotment A/c (Being the balance allotment money
received on 49500 shares) |
|
2,47,500 2,500 |
2,50,000 |
|
Equity Share First and Final Call
A/c Dr.
To Equity Share Capital A/c (Being first and final call money due on
50000 shares @ Rs. 5 each) |
|
2,50,000 |
2,50,000 |
|
Bank A/c Dr. Calls-in-Arrear A/c Dr. To Equity Share First and Final
Call A/c (Being first and final call money
received on 49500 shares @ Rs. 5 per share. Money not received on 500 shares
has been transferred to Call-in-Arrear Account) |
|
2,47,500 2,500 |
2,50,000 |
|
Equity Share Capital A/c [500 x 10] Dr. Securities
Premium Reserve A/c Dr.
To Calls-in-Arrear A/c
To Forfeited Shares A/c (Being the forfeiture of 500 equity
shares for non-payment of allotment money of Rs. 5 including premium of Rs. 2
per share and first and final call @ Rs. 5 each) |
|
5,000 1,000 |
5,000 1,000 |
2022
Q. Arnab Company Ltd. issued 10,000 equity shares of
Rs. 100 each at a premium of 10% payable as under: 8
Rs. 30 on Application
Rs. 60 on Allotment (including premium)
Rs. 20 on call
Kamalesh holding 400 shares failed to pay the
allotment and call money and Monalisha holding 700 shares failed to pay the
call money. Show the Entries in the Cash book and Journal of
the company for the above transactions.
Ans:
Cash Book
|
Particulars |
Amount |
Particulars |
Amount |
|
To Equity Share Application A/c (10000 shares @ Rs. 30 each) To Equity Share Allotment A/c (9600 shares @ Rs. 60 each) To Equity Share final call A/c (8900 shares @ Rs. 20 each) |
3,00,000 5,76,000 1,78,000 |
By Balance c/d |
10,54,000 |
|
|
10,54,000 |
|
10,54,000 |
Journal Entries
In the books of Arnab Company Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Equity Share Application A/c Dr. To Equity Share Capital A/c (Being the application money on 10,000
shares @ Rs. 30 each transferred to Share Capital & excess refunded) |
|
3,00,000 |
3,00,000 |
|
Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium Reserve A/c (Being the allotment money due on 10,000
shares @ Rs. 60 each including premium of Rs. 10 per share) |
|
6,00,000 |
5,00,000 1,00,000 |
|
Calls-in-arrear A/c Dr. To Equity Share Allotment A/c (Being the allotment money not received
on 400 shares) |
|
24,000 |
24,000 |
|
Equity Share 1st and Final Call A/c Dr. To Share Capital A/c (Being the 1st and final call
money due on 10,000 shares @ Rs. 20 each) |
|
2,00,000 |
2,00,000 |
|
Calls-in-arrear A/c Dr. To Equity Share 1st and Final Call A/c (Being the Equity share 1st
and final call money not received on 1100 shares) |
|
22,000 |
22,000 |
2020
20. Bijoya Ltd. issued 2,000 shares of Rs. 100
each at par, payable as follows: 8
|
On Application On Allotment On First Call On Final Call |
Rs. 30 Rs. 30 Rs. 20 Rs. 20 |
All the shares were duly subscribed for,
call-up and paid-up, except the following:
a) Arnab holding 100 shares failed to pay
first call and final call money.
b) Ayushi holding 60 shares failed to pay the
final money.
All the above shares were forfeited after
final call.
Give journal entries in the books of the
company to record the above transactions.
Journal Entries
In the Books of Bijoy limited
|
Particulars |
L/F |
Amount Dr. |
Amount Cr. |
|
Bank A/c Dr. To Share Application A/c (For application money received on 2000
share @ Rs. 30 each) |
|
60,000 |
60,000 |
|
Share application A/c Dr. To share Capital A/c (For application money transferred share
capital A/c) |
60,000 |
60,000 |
|
|
Share allotment A/c Dr. To share Capital A/c (For allotment money due on 2000 share
@Rs. 30 each) |
60,000 |
60,000 |
|
|
Bank A/c Dr. To share allotment A/c (Being the allotment money received on
2000 shares @ Rs. 30 each) |
60,000 |
60,000 |
|
|
Share first call A/c Dr. To share Capital A/c (Being the first call money due on 2000
shares @ Rs. 20 each) |
40,000 |
40,000 |
|
|
Bank A/c Dr. Call in arrear A/c Dr. To share first call A/c (Being the first call money received on
1900 shares @ Rs. 20 each) |
38,000 2,000 |
40,000 |
|
|
Share final call A/c Dr. To share capital A/c (Being the final call money due on 2000
share @ 20 each) |
40,000 |
40,000 |
|
|
Bank A/c Dr. Calls in arrear A/c Dr. To share final call A/c (Being the final call money received on
1840 shares @ Rs. 20 each) |
36,800 3,200 |
40,000 |
2019
20. M. S. Limited issued 1,000 equity shares
of Rs. 100 each payable as follows: 8
|
On Application On Allotment On First Call On Final Call |
Rs. 25 per share Rs. 25 per share Rs. 20 per share Rs. 30 per share |
All the shares were duly subscribed for,
called-up and paid-up, except Mr. A holding 400 shares did not pay the final
call money. Show the entries in the Cash Book and Journal of the company for
the above transactions.
Ans:
Cash Book
|
Particulars |
Amount |
Particulars |
Amount |
|
To Share Application A/c (1000 shares @ Rs. 25 each) To Share Allotment A/c (1000 shares @ Rs. 25 each) To Share first call A/c (1000 shares @ Rs. 20 each) To Share final call A/c (600 shares @ Rs. 30 each) |
25,000 25,000 20,000 18,000 |
By Balance c/d |
88,000 |
|
|
88,000 |
|
88,000 |
Journal Entries
In the books of M.S. Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Share Application A/c
Dr. To Share Capital A/c (Being the application money on 1,000
shares @ Rs. 25 each transferred to Share Capital & excess refunded) |
|
25,000 |
25,000 |
|
Share Allotment A/c
Dr. To Share Capital A/c (Being the allotment money due on 1,000
shares @ Rs. 25 each) |
|
25,000 |
25,000 |
|
Share 1st Call A/c
Dr. To Share Capital A/c (Being the first call money due on 1,000
shares @ Rs. 20 each) |
|
20,000 |
20,000 |
|
Share 2nd and Final Call
A/c
Dr. To Share Capital A/c (Being the first call money due on 1,000
shares @ Rs. 30 each) |
|
30,000 |
30,000 |
|
Calls-in-arrear A/c
Dr. To Share 2nd and Final Call
A/c (Being the 2nd and final call
money not received on 400 shares) |
|
12,000 |
12,000 |
2018
20. Honda Limited issued 10,000 equity shares
of 100 each payable as follows:
Rs. 20/- on application
Rs. 30/- on allotment
Rs. 20/- on first call
Rs. 30/- on second and final call
10,000 shares were applied for the allotted.
All money due was received with the exception of both the calls on 300 shares
held by SUPRIYA. These shares were forfeited. Give necessary journal entries. 8
Ans:
Journal Entries
In the books of Honda Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Bank A/c Dr. To Share Application A/c (Being the application money received on
10,000 shares @ Rs. 20 each) |
|
2,00,000 |
2,00,000 |
|
Share Application A/c Dr. To Share Capital A/c (Being the application money on 10,000
shares @ Rs. 20 each transferred to Share Capital & excess refunded) |
|
2,00,000 |
2,00,000 |
|
Share Allotment A/c Dr. To Share Capital A/c (Being the allotment money due on 10,000
shares @ Rs. 30 each) |
|
3,00,000 |
3,00,000 |
|
Bank A/c Dr. To Share Allotment A/c (Being the allotment money received on
10,000 shares @ Rs. 30 each) |
|
3,00,000 |
3,00,000 |
|
Share 1st Call A/c Dr. To Share Capital A/c (Being the first call money due on
10,000 shares @ Rs. 20 each) |
|
2,00,000 |
2,00,000 |
|
Bank A/c Dr. Calls-in-arrear A/c Dr. To Share 1st Call A/c (Being the first call money received on
9,700 shares) |
|
1,94,000 6,000 |
2,00,000 |
|
Share 2nd and Final Call
A/c Dr. To Share Capital A/c (Being the 2nd and final call
money due on 10,000 shares @ Rs. 30 each) |
|
3,00,000 |
3,00,000 |
|
Bank A/c
Dr. Calls-in-arrear A/c Dr. To Share 2nd and Final Call
A/c (Being the 2nd and final call
money received on 9,700 shares) |
|
2,91,000 9,000 |
3,00,000 |
2017
20. NE Traders Ltd. issued 5,000 shares of Rs.
20/- each at a par payable as follows:
Rs. 5/- on Application
Rs. 5/- on Allotment
Rs. 5/- on First Call
Rs. 5/- on Second and Final Call
All the shares were duly subscribed for,
called up and paid up. Show the necessary entries in Cash Book and Journal of
the company for the above transactions.
Solution:
Cash Book
|
Particulars |
Amount |
Particulars |
Amount |
|
To Share Application A/c To Share Allotment A/c To Share 1st Call A/c To Share 2nd & Final Call A/c
|
25,000 25,000 25,000 25,000 |
By Balance c/d |
1,00,000 |
|
|
1,00,000 |
|
1,00,000 |
Journal Entries
In the Books of NE traders Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Share Application A/c
Dr. To Share Capital A/c ( Being the application money
transferred) |
|
25,000 |
25,000 |
|
Share Allotment A/c Dr.
To Share Capital A/c ( Being Allotment money due) |
|
25,000 |
25,000 |
|
Share 1st Call A/c
Dr. To Share Capital A/c ( Being the Share 1st Call
due) |
|
25,000 |
25,000 |
|
Share 2nd & Final Call
A/c
Dr.
To Share Capital A/c (Being the Share 2nd &
Final Call due) |
|
25,000 |
25,000 |
2015
20.
X Ltd. Issued 2,000 shares of Rs. 100/- each at a premium of Rs. 20 payable as
follows:
Rs.
30/- on Application.
Rs.
50/- on Allotment (including securities premium Rs. 20/-)
Rs.
40/- on First Call & Final Call.
All the shares were duly subscribed for,
called up and paid up, except Miss Nitu who holding 300 shares failed to pay
First & Final call money. Show entries in the Cash Book and Journal of the
company for the above transactions. 8
Solution:
Cash Book
|
Particulars |
Amount |
Particulars |
Amount |
|
To Share Application A/c To Share Allotment A/c To Share 1st & Final Call
A/c |
60,000 1,00,000 68,000 |
By Balance c/d |
2,28,000 |
|
|
2,28,000 |
|
2,28,000 |
Journal Entries
In the books of the Company
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Share Application A/c
Dr. To Share Capital A/c (Being the application money received on
2000 shares @ Rs. 30 each) |
|
60,000 |
60,000 |
|
Share Allotment A/c
Dr. To Share Capital A/c To Securities Premium Reserve A/c (Being the allotment money due on 2000
shares @ Rs. 50 each including Premium @ Rs. 20 per share) |
|
1,00,000 |
60,000 40,000 |
|
Share 1st and Final Call
A/c
Dr. To Share Capital A/c (Being the first & final call money
due on 2000 shares @ Rs. 40 each) |
|
80,000 |
80,000 |
|
Calls-in-arrear A/c
Dr. To Share 1st and Final Call a/c (Being the call money not received on
300 shares @ Rs. 40 each) |
|
12,000 |
12,000 |
2014/2016
20. Jugmug Limited has an authorized capital
of Rs.1000000 divided into 100000 equity shares of Rs.10 each. The directors
decided to issue 50000 shares to the public at a premium of 10% payable as
follows: 8
On
Application: Rs.3
On
Allotment: Rs. 5 (Including Premium) and the Balance on 1st and
final call.
The company received application for 60000
shares. The directors decided to reject the excess application and the money
thereon was refunded. The calls were made and call money duly received. Give
Journal Entries; prepare a Cash Book and a Balance Sheet in the books of the
company.
Solution:
Cash Book
|
Particulars |
Amount |
Particulars |
Amount |
|
To Share Application A/c (60,000 shares @ Rs. 3 each) To Share Allotment A/c To Share 1st & Final Call
A/c |
1,80,000 2,50,000 1,50,000 |
By Share Application (10,000 shares @ Rs. 3) By Balance c/d |
30,000 5,50,000 |
|
|
5,80,000 |
|
5,80,000 |
Journal Entries
In the books of Jugmug Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Equity Share Application A/c
Dr. To Equity Share
Capital A/c (Being the application money of 50,000
shares transferred to share capital) |
|
1,50,000 |
1,50,000 |
|
Equity Share Allotment A/c
Dr. To Equity Share
Capital A/c To Securities
Premium Reserve A/c (Being the allotment money due on 50,000
shares @ 5 each including premium @ Rs. 1 per share |
|
2,50,000 |
2,00,000 50,000 |
|
Equity Share 1st & Final
Call A/c
Dr. To Equity Share
Capital A/c (Being the First call money due on
50,000 shares @ Rs. 3 each) |
|
1,50,000 |
1,50,000 |
Balance Sheet of Jugmug Ltd.
|
Particulars |
Amount |
|
I.
Equity & Liabilities: 1) Shareholder’s
Fund a) Share
Capital Authorized Capital 1,00,000 @ 10 each |
10,00,000 |
|
Issued Capital 50,000 @ 10 each |
5,00,000 |
|
Subscribe Capital 50,000 @ 10 each |
5,00,000 |
|
Called up Capital 50,000 @ 10 each |
5,00,000 |
|
Paid up Capital 50,000 @ 10 each b) Reserves
& Surplus Securities Premium Reserve |
5,00,000 50,000 |
|
Total
|
5,50,000 |
|
II.
Assets: 1) Current
Assets a) Cash
& Cash equivalent |
5,50,000 |
|
Total |
5,50,000 |
2013
20. Karan Ltd. decided to issue 10000 shares
of Rs.100 each at a discount of 10%, payable as follows:
On Application – Rs.30
On Allotment – Rs.40 (After deducting
discount)
Balance on 1st and final call.
The company received 9000 applications. All
the shares were duly accepted and allotted. All the calls were duly made and
all call money received accordingly. Give Journal Entries and prepare a Balance
Sheet.
Solution:
Journal Entries
In the books of Karan Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Bank A/c
Dr. To Share Application A/c (Being the application money received on
9000 shares @ Rs. 30 each) |
|
2,70,000 |
2,70,000 |
|
Share Application A/c
Dr. To Share Capital A/c (Being the application money transferred
to share Capital) |
|
2,70,000 |
2,70,000 |
|
Share Allotment A/c Dr.
Discount on issue of share A/c
Dr. To Share Capital A/c (Being the allotment money due on 9000
shares @ Rs. 40 each after deducting discount) |
|
3,60,000 90,000 |
4,50,000 |
|
Bank A/c
Dr. To Share Allotment A/c (Being the allotment money received on
9000 shares @ Rs. 40 each) |
|
3,60,000 |
3,60,000 |
|
Share 1st Call & Final
Call A/c
Dr. To Share Capital A/c (Being the first and final call money due
on 9000 shares @ Rs. 20 each) |
|
1,80,000 |
1,80,000 |
|
Bank A/c
Dr. To Share 1st & Final call A/c (Being the first and final call money received) |
|
1,80,000 |
1,80,000 |
2012
Q.20: Ashok publications Ltd. issues 3,000
shares of Rs 10 each, payable as follow: (8)
On Application Rs 2
On Allotment Rs 3
On first call Rs 2 And the balance when
required.
3,200 shares were applied for, application for
3000 was accepted by the Directors and the balance application was rejected and
money returned. Allotment money was duly received and first call was received
on 2950 shares. Pass journal entries in the books of the company for the above
transactions.
Solution:
Journal Entries
In the books of Ashok Publications Ltd.
|
Particulars |
L/f |
Amount Dr. |
Amount Cr. |
|
Bank A/c
Dr. To Share Application A/c (Being the application money received on
3200 shares @ Rs. 2 each) |
|
6,400 |
6,400 |
|
Share Application A/c
Dr. To Share Capital A/c To Bank A/c (Being the application money on 3000
shares @ Rs. 2 each transferred to Share Capital & excess refunded) |
|
6,400 |
6,000 400 |
|
Share Allotment A/c
Dr. To Share Capital A/c (Being the allotment money due on 3000
shares @ Rs. 3 each) |
|
9,000 |
9,000 |
|
Bank A/c
Dr. To Share Allotment A/c (Being the allotment money received on
3000 shares @ Rs. 3 each) |
|
9,000 |
9,000 |
|
Share 1st Call A/c
Dr. To Share Capital A/c (Being the first call money due on 3000
shares @ Rs. 2 each) |
|
6,000 |
6,000 |
|
Bank A/c
Dr. Calls-in-arrear A/c
Dr. To Share 1st Call A/c (Being the first call money received on
2950 shares) |
|
5,900 100 |
6,000 |
2009
Q. Kamrup Foods Ltd. issued 10,000 Equity
shares of Rs. 10 each at a premium of 10% payable as under:
On application Rs. 2 per share;
On allotment Rs. 5 per share (including
premium);
On first and final call Rs. 4 per share.
Applications were received for 8,000 shares
and all these applications were accepted. All money due were received except
the first and final call money on 300 shares which were forfeited. Subsequently 200 of the forfeited shares were reissued at
Rs. 7 per share as fully paid up. Pass necessary journal entries to record the
above transactions.
In the books of Kamrup Foods Ltd.
Journal
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Bank A/c
Dr.
To Equity Share Application A/c (Being application money received for
8,000 shares @ Rs. 2 per share) |
|
16,000 |
16,000 |
|
Equity Share Application A/c Dr.
To Equity Share Capital A/c (Being the application money on 8,000
shares @ Rs. 2 per share transferred to Equity Share capital Account) |
|
16,000 |
16,000 |
|
Equity Share Allotment A/c Dr.
To Equity Share Capital A/c
To Securities Premium Reserve A/c (Being allotment money due on 8,000
shares @ Rs. 5 each including premium of Rs. 1 each) |
|
40,000 |
32,000 8,000 |
|
Bank A/c
Dr.
To Equity Share Allotment A/c (Being allotment money received on 8,000
shares @ Rs. 5 per share) |
|
40,000 |
40,000 |
|
Equity Share First and Final Call
A/c Dr.
To Equity Share Capital A/c (Being first and final call money due on
8,000 shares @ Rs. 4 per share as per Board’s Resolution No…. dated….) |
|
32,000 |
32,000 |
|
Bank A/c Dr. Calls-in-Arrear A/c
Dr.
To Equity Share First and Final Call A/c (Being first and final call money
received on 7,700 shares @ Rs. 4 each. Amount not paid on 300 shares had been
transferred to Calls-in-Arrear Account) |
|
30,800 1,200 |
32,000 |
|
Equity Share Capital A/c
Dr. To Calls-in-Arrear A/c
To Forfeited Shares A/c (Note 1) (Being the forfeited of 300 equity
shares for non-payment of first and final call) |
|
3,000 |
1,200 1,800 |
|
Bank A/c (200 x Rs. 7)
Dr. Forfeited Shares A/c (200 x 3) Dr.
To Equity Share Capital A/c (Being the re-issue of 200 shares of Rs.
10 each as fully paid up at Rs. 7 per share) |
|
1,400 600 |
2,000 |
|
Forfeited Shares (200 x 3)
Dr.
To Capital Reserve A/c (Being the profit on re-issue
transferred to Capital Reserve) |
|
600 |
600 |
Working
Notes:
(1) Calculation of Amount Forfeited: 300
x [Rs. 2 on application + Rs. 4 on allotment] = Rs. 1,800
(2) Amount transferred to Capital
Reserve = 200 x (Rs. 6 – 3) = Rs. 600
(3) Forfeited amount of Rs. 600 (on
100 shares which has not been re-issued) will be shown in the Balance Sheet as
a part of paid-up Capital.
(2004, 2008, 2013)
Q.
Indian Express Ltd has forfeited the following shares of Rs. 100 each for
non-payment of allotment and call money.
(a)
100 shares held by X who has paid only the application money @ Rs. 10 each.
(b)
200 shares held by Y who has paid only the application and allotment money @
Rs. 10 and Rs. 20 each respectively.
(c)
300 shares held by Z who has paid only the application, allotment and the first
call money @ Rs. 10, Rs. 20 and Rs. 30 respectively. Shares have been fully
called up. All the shares are forfeited and are re-issued at 10% discount. Give
journal entries.
In the books of the Indian Express
Ltd.
Journal
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Share Capital A/c [600xRs. 100]
Dr.
To Share Allotment A/c [100x20]
To Share First Call A/c
[300x30]
To Share Final Call A/c
[600x40]
To Forfeited Shares A/c (Note 2) (Being the forfeiture of 600 shares for
non-payment of allotment money on 100 shares, first call money on 300 shares
and final call money on 600 shares) |
|
60,000 |
2,000 9,000 24,000 25,000 |
|
Bank A/c [600xRs. 90]
Dr. Forfeited Shares A/c
Dr.
To Share Capital A/c (Being the re-issue of 600 shares @ Rs.
90 each as per Boards Resolution No…. dated…..) |
|
54,000 6,000 |
60,000 |
|
Forfeiture Shares A/c
Dr. To Capital Reserve A/c (Being the profit on forfeiture
transferred to Capital Reserve) |
|
19,000 |
19,000 |
Working Notes:
(1) Calculation of Calls-in-Arrear
X
has paid only application money @ Rs. 10 each. He has not paid allotment, first
call and final call monies @ Rs. 20 30 and 40 respectively.
Y
has paid only application and allotment money but has not paid first call and
final call monies.
Z
has not paid only final call money.
Therefore,
total calls-in-arrear:
(2) Amount Forfeited
(3) Amount transferred to Capital Reserve
2007
Q. Sony Ltd. issued 10,000 equity shares of
Rs. 100 each, payable as Rs. 30 on application, Rs. 50 on allotment and Rs. 20
on first and final call. The shares were fully subscribed, called up and paid
up except the following:
(a) Rajeev holding 500 shares failed to pay
allotment and call money and
(b) Sanjeev holding 800 shares failed to pay
the call money.
All these shares were forfeited and
subsequently reissued as fully paid at a discount of Rs. 20 per share. Expenses
on reissue were Rs. 500. Give Journal entries in the books of the company.
In the books of Sony Ltd.
Journal
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Bank A/c
Dr.
To Equity Share Application A/c (Being application money received on
10,000 equity shares @ Rs. 30 each) |
|
3,00,000 |
3,00,000 |
|
Equity Share Application A/c Dr.
To Equity Share Capital A/c (Being the application money on 10,000
equity shares @ Rs. 30 each transferred to Equity Share Capital Account) |
|
3,00,000 |
3,00,000 |
|
Equity Share Allotment A/c
Dr.
To Equity Share Capital A/c (Being allotment money due on 10,000
equity shares @ 50 each) |
|
5,00,000 |
5,00,000 |
|
Bank A/c [9,500x50]
Dr. Calls-in-Arrear A/c
Dr. To Equity Allotment A/c (Being the allotment money received on 9500
shares @ Rs. 50 each) |
|
4,75,000 25,000 |
5,00,000 |
|
Equity Shares First and Final Call
A/c Dr. To Equity Shares Capital A/c (Being the first and final call money
due on 10,000 equity shares @ Rs. 20 each) |
|
2,00,000 |
2,00,000 |
|
Bank A/c [8,700x20]
Dr. Calls-in-Arrear A/c [1,300x20] Dr. To Equity Share First and Final
Call A/c (Being first and final call money
received on 8,700 shares @ Rs. 20 each) |
|
1,74,000 26,000 |
2,00,000 |
|
Equity Share Capital A/c [1,300xRs.
100] Dr.
To Calls-in-Arrear A/c
To Forfeited Shares A/c (Note 1) (Being the forfeiture of 1,300 shares
for non-payment of allotment money on 500 shares and first and final call
monies on 1,300 shares) |
|
1,30,000 |
51,000 79,000 |
|
Bank A/c [1,300xRs. 80]
Dr. Forfeited shares A/c [1,300xRs. 20] Dr. To Equity Share Capital A/c (Being the re-issue of 1,300 shares @
Rs. 80 each) |
|
1,04,000 26,000 |
1,30,000 |
|
Expenses on Re-issue A/c
Dr.
To Bank A/c (Being the expenses on re-issue paid) |
|
500 |
500 |
|
Forfeited Shares A/c
Dr.
To Expenses on Re-issue A/c
To Capital Reserve A/c (Being profit on re-issue transferred to
Capital Reserve) |
|
53,000 |
500 52,500 |
Working Notes:
(1) Calculation of Amount Forfeited:
(2) Amount transferred to Capital Reserve
Q. (1999). Famous Company Ltd. issued 6,000
equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as
follows:
On application Rs. 3 per share
On allotment Rs. 5 per share including
premium.
On first and final call Rs. 4 per share.
Subscriptions were received for Rs. 10,000
shares. The excess money was refunded and the allotment money was received in
full. In due course, the first and final call was made and the amount due was
received with the exception of 200 shares. These 200 shares were forfeited and
50 of the forfeited shares were subsequently reissued as fully paid for a
consideration of Rs. 6 per share. Prepare the Cash book of the Company
recording the above transactions. Also show the equity shares capital account.
In the books of Famous Company Ltd.
Cash Book (Bank column only)
|
Date |
Particulars |
Rs. |
Date |
Particulars |
Rs. |
|
|
To Equity Share Application A/c (Being application money received on
10,000 shares @ Rs. 3 each) |
30,000 |
|
By Equity Share Application A/c (Being excess application money refunded
on 4,000 shares @ Rs. 3 each as per Board’s Resolution No… dated…..) |
12,000 |
|
|
To Equity Shares Allotment A/c (Being allotment money received on 6,000
shares @ Rs. 5 each) |
30,000 |
|
By Balance c/d |
71,500 |
|
|
To Equity Share First and Final Call A/c
(Being first and final call money
received on 5,800 shares @ Rs. 4 each) |
23,200 |
|
|
|
|
|
To Equity Share Capital A/c (Being re-issue of 50 shares @ Rs. 6
each) |
300 |
|
|
|
|
|
|
83,500 |
|
|
83,500 |
In the books of Famous Company Ltd.
Journal
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Equity Share Application A/c Dr.
To Equity Share Capital A/c (Being application money on 6,000 shares
@ Rs. 3 each transferred to Equity Share Capital Account as per Board’s
Resolution No…. dated….) |
|
18,000 |
18,000 |
|
Equity Shares Allotment A/c Dr.
To Equity Share Capital A/c
To Securities Premium A/c (Being allotment money due on 6,000
shares @ Rs. 5 including premium of Rs. 2 per share as per Board’s Resolution
No…. dated…) |
|
30,000 |
18,000 12,000 |
|
Equity Share First and Final Call
A/c Dr.
To Equity Share Capital A/c (Being first and final call money due on
6,000 shares @ Rs. 4 per share as per Board’s Resolution No…. dated…) |
|
24,000 |
24,000 |
|
Calls-in-Arrear A/c
Dr.
To Equity Share First and Final Call A/c (Being the amount not paid on 200 shares
@ Rs. 4 each, transferred to Calls-in-Arrear Account) |
|
800 |
800 |
|
Equity Share Capital A/c
Dr. To Calls-in-Arrear A/c To Forfeited Shares A/c (Note 1) (Being the forfeiture of 200 equity
shares of Rs. 10 each for non-payment of first and final call money @ Rs. 4
per share, as per Board’s Resolution No…. dated…..) |
|
2,000 |
800 1,200 |
|
Forfeited Shares A/c
Dr.
To Equity Shares Capital A/c (Being the re-issue of 50 shares at a
discount of Rs. 4 per share, as per Board’s Resolution No….. dated…..) |
|
200 |
200 |
|
Forfeited Shares A/c
Dr.
To Capital Reserve A/c (Being the profit on re-issue of 50
shares transferred to Capital Reserve) |
|
100 |
100 |
Equity Share Capital Account
|
Particulars |
Rs. |
Particulars |
Rs. |
|
To Calls-in-Arrear A/c To Forfeited Shares A/c To Balance c/d |
800 1,200 58,500 |
By Equity Share Application A/c By Equity Share Allotment A/c By Equity Share First and Final Call A/c By Bank A/c By Forfeited Shares A/c |
18,000 18,000 24,000 300 200 |
|
|
60,500 |
|
60,500 |
Tutorial Notes:
(1) Profit on re-issue of 50 shares
(50 x Rs. 2) Rs. 100 is to be transferred to Capital Reserve.
(2) The balance of forfeited amount Rs. 900 (1,200 – 200 – 100)
will be shown in the Balance Sheet as a part of the paid-up capital.
2001
Q. (2001).
Eastern Traders Ltd. Offered for public subscription 20,000 equity shares of
Rs. 100 each at a premium of Rs. 10 per share. The payment was to be made as
follows:
On
application Rs. 20 per share.
On allotment
Rs. 40 (including premium).
On first and
final call Rs. 50.
Applications
received were for 35,000 shares. Applications for 10,000 shares were rejected
and money was returned and those totalling for 15,000 shares were allotted
10,000 shares on prorata and remaining application were allotted in full. The directors
made the final call and one shareholder hold the 500 shares failed to pay the
call money and as a consequence his shares were forfeited. 200 of these shares
were re-issued as fully paid at Rs. 80 per share and the amount was received.
Give Journal entries in the books of the company.
In the books of Eastern Traders Ltd.
Journal
|
Particulars |
L.F. |
Dr. (Rs.) |
Cr. (Rs.) |
|
Bank A/c
Dr.
To Equity Share Application A/c (Being application money received on
35,000 shares @ Rs. 20 each) |
|
7,00,000 |
7,00,000 |
|
Equity Share Application A/c Dr.
To Equity Share Capital A/c (Being application money on 20,000
shares @ Rs. 20 each transferred to Equity Share Capital Account as per
Board’s Resolution No…. dated….) |
|
4,00,000 |
4,00,000 |
|
Equity Share Application A/c Dr.
To Bank A/c (Being application money on 10,000
shares @ Rs. 20 each refunded as per Board’s Resolution No…. dated….) |
|
2,00,000 |
2,00,000 |
|
Equity Share Application
Dr.
To Equity Share Allotment A/c (Being excess application money for
5,000 shares @ Rs. 20 each transferred to Equity Share Allotment Account.) |
|
1,00,000 |
1,00,000 |
|
Equity Share Allotment A/c
Dr. To Equity Share Capital A/c To Securities Premium A/c (Being the allotment money due on 20,000
shares @ Rs. 40 per share as per Board’s Resolution No…. dated…..) |
|
8,00,000 |
6,00,000 2,00,000 |
|
Bank A/c
Dr. To Equity Share Allotment A/c (Being the balance allotment money
received) |
|
7,00,000 |
7,00,000 |
|
Equity Share First and Final Call
A/c Dr.
To Equity Share Capital A/c (Being first and final call money due on
20,000 shares @ Rs. 50 each as per Board’s Resolution No…. dated….) |
|
10,00,000 |
10,00,000 |
|
Bank A/c
Dr. Calls-in-Arrear A/c
Dr. To Equity Share First and Final
Call A/c (Being first and final call money
received on 19,500 shares @ Rs. 50 per share. Money not received on 500
shares has been transferred to Call-in-Arrear Account) |
|
9,75,000 25,000 |
10,00,000 |
|
Equity Share Capital A/c [500 x
100] Dr.
To Calls-in-Arrear A/c
To Forfeited Shares A/c [500 x Rs. 50] (Being the forfeiture of 500 equity
shares for non-payment of first and final call @ Rs. 50 each as per Board’s
Resolution No…. dated…) |
|
50,000 |
25,000 25,000 |
|
Bank A/c [200 x Rs. 80]
Dr. Forfeited Shares A/c [200 x Rs. 20] Dr.
To Equity Share Capital A/c (Being the re-issue of 200 equity shares
of Rs. 100 each @ Rs. 80 as fully paid up as per Board’s Resolution No….
dated…) |
|
16,000 4,000 |
20,000 |
|
Forfeited Shares A/c (Note 1) Dr.
To Capital Reserve A/c (Being the profit on re-issue of 200
shares transferred to Capital Reserve Account) |
|
6,000 |
6,000 |
Working Notes:
(1) Amount transferred to Capital
Reserve = 200 [Rs. 50 – 20] = Rs. 6,000
(2) Forfeited amount on 300 shares @
Rs. 50 (total Rs. 15,000) will be shown in the Balance Sheet as a part of the
paid-up capital.
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