question_answer

A limited company issued a prospectus inviting applications for 2,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:

On application	Rs. 2 per share
On allotment	Rs. 5 per share (including premium)
On first call	Rs. 3 per share
On second call	Rs. 2 per share

Applications were received for 3,000 shares and allotment made pro-rata to the applicants of 2,400 shares, the remaining applications being refused. Money overpaid on applications was employed on account of sums due to allotment. Taksh, to whom 40 shares were allotted, failed to pay allotment money and on his subsequent failure to pay first call, his shares were forfeited. Daksh, the holder of 60 shares, failed to pay the two calls and so his shares were also forfeited. All these shares were sold to Naksh credited as fully paid for Rs. 9 per share. Show the journal and cash book entries in the books of company. Or Mohan Ltd invited application for issuing 60,000 shares of Rs. 10 each at par. The amount was payable as follows: On application Rs. 2 per share; on allotment Rs. 3 per share; on first and final call Rs. 5 per share. Applications were received for 92,000 shares. Allotment was made on the following basis:

(i)	To applicants for 40,000 shares	Full
(ii)	To applicants for 50,000 shares	40%
(iii)	To applicants for 2000 shares	Nil

Rs. 1,08,000 was realised on account of allotment (excluding the amount carried from application money) and ? 2,50,000 on account of call. The directors decided to forfeit shares of those applicants to whom full allotment was made and on which allotment money was overdue. Pass journal entries in the books of Mohan Ltd to record the above transactions.

Answer:

                                                                        JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Share Application A/c	Dr		4,800
	To Share Capital A/c				4,000
	To Share Allotment A/c				800
	(Being application money transferred to share capital account)
	Share Allotment A/c	Dr		10,000
	To Share Capital A/c				6,000
	To Securities Premium Reserve A/c				4,000
	(Being allotment money due)
	Share First Call A/c	Dr		6,000
	To Share Capital A/c				6,000
	(Being first call money due)
	Share Capital A/c \[\left( 40\times 8 \right)\]	Dr		320
	Security Premium Reserve A/c \[\left( 40\times 2 \right)\]	Dr		80
	To Share Allotment A/c				184
	To Share First Call A/c				120
	To Forfeited Share A/c				96
	(Being 40 shares forfeited)
	Share Second and Final Call A/c \[\left( 1,960\times 2 \right)\]	Dr		3,920
	To Share Capital A/c				3,920
	(Being second call money due)
	Share Capital A/c	Dr		600
	To Share First Call A/c				180
	To Share Second and Final Call A/c				120
	To Forfeited Share A/c				300
	(Being 60 shares forfeited
	Forfeited Shares A/c	Dr		100
	To Share Capital A/c				100
	(Being discount allowed on reissue of shares)
	Forfeited Shares A/c	Dr		296
	To Capital Reserve A/c				296
	(Being profit on reissue of shares transferred to capital reserve account)

Dr                                                                     Cash Book                                                                   Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Share Application A/c \[(3,000\times 2)\]	6,000	By Share Application A/c \[(600\times 2)\]	1,200
To Share Allotment A/c	9,016	By Balance c/d	24,216
To Share First Call A/c	5,700
To Share Second and Final Call A/c	3,800
To Share Capital A/c	900
	25,416		25,416

Working Notes 1. Shares applied by Taksh \[=40\times \frac{2,400}{2,000}=48\,Shares\]

	Amt (Rs.)
Money received on application \[\left( 48\times 2 \right)\]	96
(-) money due on application \[\left( 40\times 2 \right)\]	(80)
Excess money	16
Money due on allotment \[\left( 40\times 5 \right)\]	200
(-) Excess money adjusted	(16)
Calls-in-arrears	184
2. Total money due on allotment \[\left( 2,000\times 5 \right)\]	10,000
(-) Excess money to be adjusted \[\left( 400\times 2 \right)\]	(800)
	9,200
(-) Calls in arrears	(184)
Money received on allotment	9,016

Or JOURNAL

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Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Bank A/c \[\left( 92,000\times 2 \right)\]	Dr		1,84,000
	To Share Application A/c				1,84,000
	(Being application money received on 92,000 shares @ Rs. Per Share)
	Share Application A/c	Dr		1,84,000
	To Share Capital A/c \[\left( 60,000\times 2 \right)\]				1,20,000
	To Share Allotment A/c \[\left( 30,000\times 2 \right)\]				60,000
	To Bank A/c \[\left( 2,000\times 2 \right)\]				4,000
	(Being the application money adjusted towards share capital and share allotment and surplus refunded)
	Share Allotment A/c \[\left( 60,000\times 3 \right)\]	Dr		1,80,000
	To Share Capital A/c				1,80,000
	(Being allotment money due on 60,000 shares @ Rs. 3 per share)
	Bank A/c	Dr		1,08,000
	To Share Allotment A/c				1,08,000
	(Being allotment money received)
	Share First and Final Call A/c \[\left( 60,000\times 5 \right)\]	Dr		3,00,000
	To Share Capital A/c				3,00,000
	(Being the first and final call money due on 60,000 shares @ Rs. 5 Per Share)