question_answer

Arundhati Ltd was registered with a capital of Rs. 10,00,000 in shares of Rs. 20 each. It invited applications for 50,000 shares. The amount is payable as Rs. 5 on application, Rs. 10 on allotment and Rs. 5 on first and final call. Give journal entries for the above transactions and also show the cash book of the firm, when the public has subscribed for 46,500 shares.

Answer:

                                                            JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Share Application A/c	Dr		2,32,500
	To Share Capital A/c \[(46,500\times 5)\]				2,32,500
	(Being application money received, transferred to capital account at the time of allotment)
	Share allotment A/c	Dr		4,65,000
	To Share Capital a/c \[(46,500\times 10)\]				4,65,000
	(Being allotment money due)
	Share First and final Call A/c	Dr		2,32,500
	To Share Capital A/c \[(46,500\times 5)\]				2,32,500
	(Being first and final call money due)

Dr                                                                     Cash Book                                                                   Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Share Application A/c	2,32,500	By Balance c/d	9,30,000
To Share Allotment A/c	4,65,000
To Share First and Final Call A/c	2,32,500
	9,30,000		9,30,000

Note When cash book is maintained, journal entries related to receipt of application, allotment or calls are not passed. Rather, they are recorded in cash book.