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