Practical Problem 06

Practical problem | Q 6 | Page 342
Suhas Limited issued 10000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable ₹ 3 on application, ₹ 5 (including premium) on allotment and the balance in two calls of equal amount. Applications were received for ll,000 equity shares and pro-rata allotment was made for all the applicants. The excess application money was adjusted towards allotment. Mrs. Shobha who were allotted 200 equity shares failed to pay F/F/C and her shares were forfeited after the final call
Show Journal entries in the books of Suhas Ltd. and also show its presentation in Balance sheet.

SOLUTION:

                                                                                                Journal Entries in the books of Suhas Limited

Date

Particulars

L.F

Debit Amount (₹)

Credit Amount (₹)

1

Bank A/c……………………………………………………………….. Dr

 

33,000

 

             To Equity Share Application A/c

  

33,000

( Being application money on 11,000 equity shares @ ₹ 3 per share received)

   

2

Equity Share Application A/c ………………………………..Dr

 

33,000

 

             To Equity Share Capital A/c

  

30,000

             To Equity Share Allotment A/c

  

3,000

( Being application money on 10,000 shares transferred to Share Capital A/c and remaining amount adjusted against allotment)

   

3

Equity Share Allotment A/c …………………………………..Dr

 

50,000

 

             To Equity Share Capital A/c

  

30,000

             To Share Premium A/c

  

20,000

( Being allotment money on 10,000 equity shares @ ₹ 5 per share, including premium of ₹ 2 per share, due)

   

4

Bank A/c ………………………………………………………………..Dr

 

47,000

 

             To Equity Share Allotment A/c

  

47,000

( Being share allotment money received after adjusting excess application money received)

   

5

Equity Share First Call A/c ……………………………………..Dr

 

20,000

 

             To Equity Share Capital A/c

  

20,000

( Being equity share first call money on 10,000 shares @ ₹ 2 per share due)

   

6

Bank A/c…………………………………………………………….… Dr

 

19,600

 

            To Equity Share First Call A/c

  

19,600

( Being share first call money received @ ₹ 2 per share except 200 shares of Mrs Shobha)

   

7

Equity Share Final Call A/c …………………………………….Dr

 

20,000

 

            To Equity Share Capital A/c

  

20,000

( Being equity share final call money on 10,000 shares @ ₹ 2 per share due)

   

8

Bank A/c……………………………………………………………….. Dr

 

19,600

 

            To Equity Share Final Call A/c

  

19,600

( Being share final call money received @ ₹ 2 per share except 200 shares of Mrs. Shobha)

   

9

Equity Share Capital A/c ……………………………………….Dr

 

2,000

 

           To Equity Share First Call A/c

  

400

           To Equity Share Final Call A/c

  

400

           To Equity Share Forfeiture A/c

  

1,200

( Being 200 shares of Mrs. Shobha forfeited due to non-payment of first and final call @ ₹ 2 each i.e. paid amount ₹ 6 per share forfeited by company)

   
   

244200

244200

 

                                                                                                          Balance Sheet of Suhas Limited

Liabilities

Amount (₹)

Assets

Amount (₹)

Share Capital A/c

98,000

Bank A/c

1,19,200

Share Premium A/c

20,000

  

Share forfeiture A/c

1,200

  
 

1,19,200

 

1,19,200

Working Notes :

(1) Excess amount received at the time of application ₹ 3,000 adjusted at allotment stage, so allotment amount received in bank is ₹ 47,000.

(2) Amount called-up per share: ₹ 3 on application, ₹ 5 (including premium) on allotment i.e. ₹ 2 premium + ₹ 3 capital and balance amount ₹ 4 in two calls of equal amount i.e. ₹ 2 on first call and ₹ 2 on final call.

(3) Mrs Shobha was not able to pay  First and final call means 200 × ₹ 2 first call money = ₹ 400 and 200 × ₹ 2 final call money = ₹ 400. Mrs Shobha paid ₹ 6 per share towards capital which company received and company has right to forfeit only paid amount means company forfeited ₹ 1,200 of Mrs Shobha.