Practical Problem 05
Practical problem | Q 5 | Page 342
Sucheta Company Limited issued ₹ 20,00,000 new capital divided into ₹ 100 equity shares at a Premium of ₹ 20 per share payable as ₹ 10 on Application ₹ 40 on Allotment and ₹ 10 premium ₹ 50 on Final call and ₹ 10 premium.
The issue was oversubscribed to the extent of 26000 equity shares. The applicants on 2000 shares were sent letter of regret and their application money was refunded. Remaining applicants were allotted shares on a pro-rata basis. All the money due on Allotment and Final call was duly received.
Make necessary Journal entries in the books of Sucheta Company Ltd.
SOLUTION:
Journal Entries in the books of Sucheta Company Limited
Date | Particulars | L.F | Debit Amount (₹) | Credit Amount (₹) |
1 | Bank A/c Dr. | 2,60,000 | ||
To Equity Share Application A/c | 2,60,000 | |||
( Being application money on 26,000 equity shares @ ₹ 10 per share received) | ||||
2 | Equity Share Application A/c Dr. | 20,000 | ||
To Bank A/c | 20,000 | |||
( Being application money on 2,000 equity shares @ ₹ 10 per share refunded) | ||||
3 | Equity Share Application A/c Dr. | 2,40,000 | ||
To Equity Share Capital A/c | 2,00,000 | |||
To Equity Share Allotment A/c | 40,000 | |||
( Being application money on 20,000 equity shares transferred to equity share capital and application money on 2,000 equity shares adjusted against Share Allotment A/c) | ||||
4 | Equity Share Allotment A/c Dr. | 10,00,000 | ||
To Equity Share Capital A/c | 8,00,000 | |||
To Share Premium A/c | 2,00,000 | |||
( Being allotment money (including premium) on 20,000 equity shares @ ₹ 50 per share due) | ||||
5 | Bank A/c Dr. | 9,60,000 | ||
To Equity Share Allotment A/c | 9,60,000 | |||
( Being allotment money on 20,000 equity shares, after adjusting excess application money received) | ||||
6 | Equity Share Final Call A/c Dr. | 12,00,000 | ||
To Equity Share Capital A/c | 10,00,000 | |||
To Share Premium A/c | 2,00,000 | |||
( Being share final call money (including premium) on 20,000 equity shares @ ₹ 60 per share due) | ||||
7 | Bank A/c Dr | 12,00,000 | ||
To Equity Share Final Call A/c | 12,00,000 | |||
( Being share final call money on 20,000 equity shares @ ₹ 60 per share received) | ||||
4880000 | 4880000 |
Working Note :
Calculation of Application money transferred to Share Allotment :
Application money received (26,000 × 10) : | 2,60,000 |
Less: Application money refunded (2,000 × 10) : | 20,000 |
2,40,000 | |
Less: Application money transferred to Share Capital : (20,000 × 10) | 2,00,000 |
Excess money received on application transferred to Share Allotment: | 40,000 |
Bifurcation of calls amount :
Per-share value ₹ 100 Premium amount ₹ 20 | On Application: ₹ 10 per share |
On Allotment: ₹ 40 per share for Capital + ₹ 10 per share for Premium | |
On final call: ₹ 50 per share for Capital + ₹ 10 per share for Premium |