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Accounting For Share Capital
X Ltd. issued 40,000 Equity Shares of Rs. 10 each at a premium of Rs. 2.50 per share. The amount was payable as follows:
On application – Rs. 2 per share
On allotment – Rs. 4.50 per share (including premium)
and on call – Rs. 6 per share
Owing to heavy subscription the allotment was made on pro-rata basis as follows:
(a) Applicants for 20,000 shares were allotted 10,000 shares.
(b) Applicants for 56,000 shares were allotted 14,000 shares.
(c) Applicants for 48,000 shares were allotted 16,000 shares.
It was decided that excess amount received on applications would be utilized on allotment and the surplus would be refunded.
Ram, to whom 1,000 shares were allotted, who belong to category (a), failed to pay allotment money. His shares were forfeited after the call.
Pass the necessary Journal entries in the books of X Ltd. for the above transactions.
Date | Particulars | LF | Debit (Rs) | Credit (Rs) |
| Bank A/c Dr
To Equity Share Application A/c
(Being application money received)
|
| 248000
248000
180000
30500
30500
2500
240000
234000
234000 6000
10000
2500
|
248000
80000
147000
21000
80000
100000
30500
33000
234000
240000
4000
2500
6000
4000 |
Equity share application A/c Dr
To Equity share capital A/c
To Equity share Allotment A/c
To Bank A/c
(Being application money transferred)
| ||||
Equity Share Allotment A/c Dr
To Equity Share Capital A/c
To Securities Premium A/c
(Being Allotment money due)
| ||||
Bank A/c Dr
To Equity Share Allotment A/c
( being allotment money received)
Or
Bank A/c Dr
Calls in Arrear A/c Dr
To Equity Share Allotment A/c
( being allotment money received)
| ||||
Equity Share First & Final Call A/c Dr To Equity Share Capital A/c
(Being First & Final Call money due)
| ||||
Bank A/c Dr
To Equity Share First & Final Call A/c OR
Bank A/c Dr
Calls in Arrears A/c Dr
To Equity Share First & Final Call A/c
(Being First & Final Call money received)
| ||||
Securities Premium A/c Dr
To Forfeited Share A/c
To Equity Share Allotment A/c
To Equity Share First & Final Call A/c
OR
Equity Share Capital A/c Dr
Securities Premium A/c Dr
To Forfeited Share A/c
To Calls in Arrears A/c
(Being 1000 shares forfeited) |
Working note:
1) Analysis Table
Share applied (Rs) | Shares allotted (Rs) | Application money received (Rs) | Share application money transferred to share capital a/c (Rs) | Excess application money received (Rs) | Share allotment due (Rs) | Share allotment received (Rs) | Refunded (Rs) |
20000 56000 48000 | 10000 14000 16000 | 40000 112000 96000 | 20000 28000 32000 | 20000 84000 64000 | 45000 63000 72000 | 25000
8000 |
21000 |
124000 | 40000 | 248000 | 80000 | 168000 | 180000 | 33000 | 21000 |
2) Calculation of Calls in arrears on allotment:
Category (a) Applicants of 20,000 shares were allotted 10,000 shares
Ram was allotted 1000 shares, He applied for : (1000 x 20000) / 10000 = 2000 shares
Calls in arrear (1000 x 4.5 ) = 4,500
Less: Already received (1000 x 2) = 2,000
= Rs 2500
Sponsor Area
Give any one purpose for which the amount received as 'Securities Premium' may be utilised.
Pass necessary journal entries for the following transactions in the books of Rajan Ltd.
Rajan Ltd. purchased machinery of Rs 7,20,000 from Kundan Ltd. The payment was made to Kundan Ltd. by issue of equity shares of Rs 100 each at 10% discount.
Pass necessary journal entries for the following transactions in the books of Rajan Ltd.
Rajan Ltd. purchased a running business from Vikas Ltd. for a sum of Rs 2,50,000 payable as Rs 2,20,000 in fully paid equity shares of Rs 10 each and balance by a bank draft. The assets and liabilities consisted of the following:
Plant & Machinery Rs 90,000; Building Rs 90,000; Sundry Debtors Rs 30,000; Stock Rs 50,000; Cash Rs 20,000; Sundry Creditors Rs 20,000.
XYZ Ltd. invited applications for 40,000 equity shares of Rs 100 each at a discount of 6%. The amount was payable as follows:
On Application and Allotment Rs 90 per share. On First and Final call the balance amount. Application for 60,000 shares were received. Applications for 10,000 shares were rejected and shares were allotted on pro-rata basis to remaining applicants. Excess application money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. A shareholder, who applied for 50 share, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were re-issued at Rs 97 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of XYZ Ltd.
AB Ltd. invited applications for issuing 75,000 equity shares of Rs 100 each at a premium of Rs 30 per share. The amount way payable as follows:
On Application and Allotment Rs 85 per share (including premium)On First and Final call the balance Amount Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and share were allotted on pro-rata basis to the remaining applicants. Excess money received on application and allotment was adjusted towards sums due to first and final call. The calls were made. A shareholder, who applied for 1,000 shares, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs 150 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of AB Ltd.
What is meant by Securities Premium?
What rate of interest the company pays on calls - in advance if, it has not prepared its own Articles of Association?
Madhav Ltd. issued fully paid equity shares of Rs. 80 each at a discount of Rs. 5 per share for the purchase of a running business from Gupta Bros. for a sum of Rs. 15,00,000.
The assets and liabilities consisted of the following:
Plant Rs. 5,00,000; Trucks Rs. 7,00,000; Stock Rs. 3,00,000; Machinery Rs. 6,00,000 and Sundry Creditors Rs. 5,00,000.
You are required to pass necessary journal entries for the above transactions in the books of Madhav Ltd.
Moneyplus Company issued for public subscription 75,000 shares of the value of Rs 10 each at a discount of 10% payable as follows:
Rs 2 per share on application, Rs 3 per share on allotment and Rs 4 per share on call.
The company received applications for 1,50,000 shares. The allotment was done as under:
(a) Applicants of 15,000 shares were allotted 5,000 shares.
(b) Applicants of 70,000 shares were allotted 40,000 shares.
(c) Remaining applicants were allotted 30,000 shares.
Money in excess to allotment was returned. Hari, a shareholder who had applied for 3,500 shares out of group B failed to pay allotment and call money. Rohan, a shareholder who was allotted 3,000 shares paid the call money along with the allotment. Rohan also belonged to group B.
Pass necessary journal entries to record the above transactions in the books of the company. Show your working notes clearly.
Sponsor Area
Sponsor Area