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EQUITY SHARES
50. Give journal entries for the forfeiture and reissue only in each case:
(a) The directors of a company with a subscribed capital of 20,000 equity shares of Rs. 25
each and 20,000 preference shares of Rs. 25 each, on both of which Rs. 20 per; share were called
up, forfeited 200 equity shares held by A on which he had failed to pay first and second calls of Rs.
5 per share each. They also forfeited 400 preference shares of B who failed to pay Rs. 5 per share
on allotment, Rs. 5 per share on first call, Rs. 5 per share on second call. The directors further
reissued the forfeited shares of A at Rs. 15 per share and those of B at Rs. 17.50 per share, all of
which were taken up and paid for by C.
(b) X Ltd. forfeited 100 equity shares of Rs. 10 each held by Shyam on 15 December for non-payment
of first call of Rs. 2 per share and the final call of Rs. 3 per share. These shares were reissued to
Ram on 25 December at a discount of Rs. 3.50 per share.
(c) X Ltd. forfeited 100 equity shares of Rs. 10 each, issued at a premium of Rs. 5 per share, held by
Mohan 15 December for non-payment of final call of Rs. 3 per share. These shares are reissued to
Somnath on 25 December at a discount of Rs. 4 per share.
(d) X Ltd. forfeited 150 equity shares of Rs. 10 each issued at a premium of Rs. 5 per share, held by
Radha on 25 December for non-payment of allotment money of Rs. 8 per share (including share
premium of Rs. 5 per share), the first call of Rs. 2 per share and final call of Rs. 3 per share. Out of
these, 100 equity shares were reissued to Beena at Rs. 14 per share on 25 December.
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SOLUTION
Journal Entries
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Date Particulars Debit Credit
E Rs. Rs.
(a) Equity Share Capital Account Dr. 4,000
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(i) To Share Forfeited Account 2,000
To Calls-in-Arrears Account 2,000
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shares of Rs. 25 each with called up amount of Rs. 20)
Share Forfeited Account Dr. 2,000
(iv) To Capital Reserve Account 2,000
(Profit on reissue of forfeited shares transferred to
capital reserve account)
(b) Equity Share Capital Account Dr. 1,000
(i) To Forfeited Shares Account 500
To Share First Call Account 200
To Share Second and Final Call Account 300
(Forfeiture of 100 shares for non-payment of first call
of Rs. 2 per share and second call of Rs. 3 per share)
(ii) Bank Account Dr. 650
Forfeited Shares Account Dr. 350
To Equity Share Capital Account 1,000
(Reissue of 100 forfeited shares at Rs. 650 fully paid)
(iii) Forfeited Share Account Dr. 150
To Capital Reserve Account 150
(Profit on reissue of forfeited shares transferred to
Capital Reserve)
A
(c) Equity Share Capital Account Dr. 1,000
(i) To Forfeited Shares Account 700
C
To Share Final Call Account 300
(Forfeiture of 100 shares for non-payment of final
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call of Rs. 3 per share)
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(ii) Bank Account Dr. 600
Forfeited Shares Account Dr. 400
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53. Gabbu Limited issued 6,00,000 shares of Rs. 10 each payable as under :
Rs. 3 on application payable on 1 January
Rs. 3 on allotment payable 1 March
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Rs. 2 on first call payable on 1 June
Rs. 2 on final call payable on 1 November
C
Applications were received for 10,00,000 shares and the allotments were made as under :
To applicants for 5,20,000 shares — Full
To applicants for 3,60,000 shares — 80,000
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To applicants for 1,20,000 shares — Nil
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Excess money received on applications was utilised towards allotment and subsequent calls authorised
by the articles of association. Journalise the transactions, assuming all sums due were received. Ignore
interest.
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Solution
Gabbu Ltd.
Journal Entries
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Rs. Rs.
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(Transfer of application money to share capital
account on allotment of shares and the balance
to other instalments; suplus refunded)
Mar 1 Share Allotment Account Dr. 18,00,000
To Equity Share Capital Account 18,00,000
(Allotment money due on 6,00,000 shares
@ Rs. 3 each)
Mar 1 Bank Account Dr. 15,60,000
To Share Allotment Account 15,60,000
(Receipt of allotment money on 5,20,000
shares @ Rs. 3 each)
June 1 Share First Calls Account Dr. 12,00,000
To Equity Share Capital Account 12,00,000
(First call due on 6,00,000 shares @ Rs. 2 each)
June 1 Bank Account Dr. 10,40,000
Calls-in-Advance Account Dr. 1,60,000
To Share First Call Account 12,00,000
(First call money received)
Nov. 1 Share Second and Final Call Account Dr. 12,00,000
To Equity Share Capital Account 1,20,000
(Second and final call due on 6,00,000
shares Rs. 2 each)
A
Nov. 1 Bank Account Dr. 10,40,000
Calls-in-Advance Account Dr. 1,60,000
C
To Share Second and Final Call Account 12,00,000
(Amount due on second and final call received
E
54. JHP Limited is a company with an authorised share capital of Rs. 10,00,000 in equity
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shares of
Rs. 10 each, of which 6,00,000 shares had been issued and fully paid on 30th June, 2005. The company
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proposed to make a further issue of 1,00,000 of these Rs. 10 shares at a price of Rs.14each, the
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(b) Allotment to be made on 10th July, 2005 and a further Rs. 5 per share (including the premium) to be
payable;
(c) The final call for the balance to be made, and the money received by 30th April, 2006.
Applications were received for 3,55,000 shares and were dealt with as follows:
(i) Applicants for 5,000 shares received allotment in full;
(ii) Applicants for 30,000 shares received an allotment of one share for every two applied for; no money
was returned to these applicants, the surplus on application being used to reduce the amount due on
allotment;
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(iii) Applicants for 3,20,000 shares received an allotment of one share for every four applied for; the
money due on allotment was retained by the company, the excess being returned to the applicants; and
(iv) the money due on final call was received on the due date.You are required to record these
transactions (including cash items) in the Journal of JHP
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55. B. Ltd. issued 20,000 equity shares of Rs.10 each at a premium of Rs.2 per share
payable as
follows: on application Rs.5; on allotment Rs.5 (including premium); on final call Rs.2.Applications were
received for 24,000 shares. Letters of regret were issued to applicants for4,000 shares and were allotted
to all the other applicants. Mr. A, the holder of 150 shares,failed to pay the call money, the shares were
forfeited. Show the Journal Entries and CashBook in the books of B. Ltd.(ICAI)
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56. Bhavna-Kareena Ltd. offered 10,000 equity shares of Rs. 100 each for subscription at a
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premium of Rs. 20 per share payable as follows :
On Aplication Rs. 10
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On Allotment Rs. 40 (including premium)
On First Call Rs. 20
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On Second Call Rs. 30
and balance on Final Call.
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The company received applications for 12,000 shares and 10,000 shares were allotted pro-rata.Holders
of 400 shares failed to pay the first call and after due notice, their shares were forfeited. The amounts
payable on second call were paid in full except that a holder of 200 shares failed to pay.250 of the 400
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shares forfeited were reissued, credited Rs. 80 paid for Rs. 75 per share.The final call was met in full
including the arrears of the second call.Journalise the transactions including cash transactions in the
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Solution
Bhavna-Kareena Ltd.
Journal Entries
Rs. Rs.
(i) Bank Account Dr. 1,20,000
To Share Application Account 1,20,000
(Application money received on 12,000
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equity shares @ Rs. 10 per share)
(ii) Share Application Account Dr. 1,20,000
To Equity Share Capital Account 1,00,000
To Share Allotment Account 20,000
(Application money transferred to equity
share capital account on 10,000 shares and the
balance adjusted towards allotment money)
(iii) Share Allotment Account Dr. 4,00,000
To Equity Share Capital Account 2,00,000
To Securities Premium Account 2,00,000
(Share allotment money due on 10,000 shares
@ Rs. 40 per share including premium
@ Rs. 20 per share)
(iv) Bank Account Dr. 3,80,000
To Share Allotment Account 3,80,000
(Allotment money received on all the
shares allotted)
(v) Share First Call Account Dr. 2,00,000
To Equity Share Capital Account 2,00,000
(First call money due on 10,000 equity shares
@ Rs. 20 per share)
(vi) Bank Account (9,600 × 20) Dr. 1,92,000
A
Calls-in-Arrears Account (400 × 20) Dr. 8,000
To Share First Call Account (10,000 × 20) 2,00,000
C
(First call money received on 9,600 shares
Rs. 20 per share)
E
(vii) Equity Share Capital Account (400 × 50) Dr. 20,000
To Calls-in-Arrears Account (400 × 20) 8,000
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To Share Forfeited Account (400 × 30) 12,000
(Forfeiture of 400 shares for non-payment
of first call)
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forfeited account)
(xi) Share Third and Final Call Account Dr. 1,97,000
To Equity Share Capital Account 1,97,000
(Amount due for final call on 9,850 shares
@ Rs. 20 per share)
Bank Account Dr. 2,03,000
To Share Third and Final Call Account 1,97,000
To Calls-in-Arrears Account 6,000
(Being the final call amount received in full
together with arrears on second call of 200 shares)
57. Dynamic Ltd. makes an issue of 5,000 equity shares of Rs. 100 each at a premium of Rs.
12.50 per share payable as follows : (i) Rs. 12.50 on application (ii) Rs. 25.00 on
allotment (including premium) (iii) Rs. 50 on first call (iv) Rs. 15 on second call and (v)
Rs. 10 on final call. The application and allotment moneys are duly received and in
addition holders of 2,500 shares pay in full on allotment. Holders of 100 shares fail to pay
the first call and after due notice their shares are forfeited. The amounts payable on the
second call (made after the forfeiture) are paid in full except that a holder of 50 shares
fails to pay. 75 of the 100 shares forfeited are reissued, credited with Rs. 90 paid for Rs.
A
65 per share. The new holder pays for these shares in full. The balance of Rs. 10 per
share being treated as calls-in-advance. The final call is met in full including the arrears
C
of the second call. Show the necessary journal entries including cash in the books of
Dynamic Ltd.
Solution
E
Dynamic Ltd.
Journal Entries
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Rs. Rs.
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(iv) Share First Call Account (5,000 × Rs. 50) Dr. 2,50,000
To Equity Share Capital Account 2,50,000
(First call on 5,000 shares @ Rs. 50 per share made)
(v) Bank Account (2,400 × 50) Dr. 1,20,000
Calls-in-Advance Account (2,500 × Rs. 50) Dr. 1,25,000
Calls-in-Arrears Account (100 × Rs. 50) Dr. 5,000
To Share First Call Account 2,50,000
(Being the amount received on first call except
on 100 shares)
(vi) Equity Share Capital Account (100 × Rs. 75) Dr. 7,500
To Forfeited Shares Account (100 × Rs. 25) 2,500
To Calls-in-Arrears Account (100 × Rs. 50) 5,000
(Forfeiture of 100 shares for non-payment
of first call money)
(vii) Share Second Call Account (4,900 × Rs. 15) Dr. 73,500
To Equity Share Capital Account 73,500
(Second call on 4,900 shares made)
(viii) Bank Account (2,350 × Rs. 15) Dr. 35,250
Calls-in-Advance Account (2,500 × Rs. 15) Dr. 37,500
Calls-in-Arrears Account (50 × Rs. 15) Dr. 750
To Share Second Call Account 73,500
(Receipt of second call monies except on 50 shares)
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(ix) Bank Account (75 × Rs. 65) Dr. 4,875
Forfeited Shares Account (75 × Rs. 25) Dr. 1,875
C
To Equity Share Capital Account (75 × 90) 6,750
(Reissue of 75 out of 100 shares at Rs. 65 each
Rs. 90 paid at a discount of Rs. 25 per share)
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(x) Bank Account (75 × Rs. 10) Dr. 750
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To Calls-in-Advance Account 750
(Payment of Rs. 10 per share on 75 shares
by new allottee to be treated
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as calls-in-advance)
(xi) Share Third and Final Call Account (4,975 × 10) Dr. 49,750
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67. Nivedita Fertilisers Ltd. issued a prospectus inviting
applications for 20,000 shares of Rs.10 each at a premium of Rs. 2 per share, payable as
follows :Rs.
On Application 3 (including Re.1 premium),On Allotment 4 (including Re.1 premium)
On First Call 3,On Second & Final Call 2
Applications were received for 30,000 shares and pro rata allotment was made on the applications for
24,000 shares. It was decided to utilise excess application money towards the amount due on allotment.
Arun to whom 400 shares were allotted, failed to pay the allotment money and on his subsequent failure
to pay the first call, his shares were forfeited. Victor, who applied for 720 failed to pay the two calls and on
his such failure, his shares were forfeited. Of the shares forfeited, 800 shares were sold to Srijita credited
as fully paid for Rs.9 per share, the whole of Aruna shares being included .Required: Give Journal
Entries to record the above transactions (including cash transactions)(ICWA)
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