Practical Problem 07

Practical problem | Q 7 | Page 342
Subhash Company Limited issues 2000 Equity shares of ₹100 each payable as ₹ 30 on application, ₹ 30 on allotment, ₹ 40 on first and final call. All the shares were subscribed and duly allotted. Company made all the calls. All cash was duly received except the first & final call on 100 equity shares. These shares were forfeited by the company and were re-issued as fully paid for ₹75 per share.
Show the Journal entries in the books of Subhash Company Ltd.

SOLUTION:

Journal Entries in the books of Anand Company Limited

                                                                             Journal Entries in the books of Anand Company Limited

Date

Particulars

L.F

Debit Amount (₹)

Credit Amount (₹)

1

Bank A/c……………………………………………………………….. Dr

 

60,000

 

           To Equity Share Application A/c

  

60,000

(Being application money on 2,000 equity shares @ ₹ 30 per share received)

   

2

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

 

60,000

 

           To Equity Share Capital A/c

  

60,000

(Being application money received on 2,000 equity shares transferred to equity share capital)

   

3

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

 

60,000

 

           To Equity Share Capital A/c

  

60,000

(Being equity share allotment money on 2,000 shares @ ₹ 30 per share due)

   

4

Bank A/c ………………………………………………………………..Dr

 

60,000

 

          To Equity Share Allotment A/c

  

60,000

(Being equity share allotment money on 2,000 shares @ ₹ 30 per share received)

   

5

Equity Share First and Final Calls A/c…………………….. Dr

 

80,000

 

          To Equity Share Capital A/c

  

80,000

(Being equity share first and final call money on 2,000 shares @ ₹ 40 per share due)

   

6

Bank A/c……………………………………………………………….. Dr

 

76,000

 

          To Equity Share First and Final Call A/c

  

76,000

(Being equity share first and final call money on 1900 shares @ ₹ 40 per share received)

   

7

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

 

10,000

 

          To Equity Share First and Final Call A/c

  

4,000

          To Equity Share Forfeiture A/c

  

6,000

( Being forfeiture of 100 shares due to non-payment of first and final call)

   

8

Bank A/c ………………………………………………………………..Dr

 

7,500

 

Equity Share Forfeiture A/c ……………………………………Dr

 

2,500

 

         To Equity Share Capital A/c

  

10,000

(Being re-issue of 100 forfeited shares @ ₹ 75 per share)

   

9

Equity Share Forfeiture A/c…………………………………… Dr

 

3,500

 

        To Capital Reserve A/c

  

3,500

(Being balance of Share Forfeiture A/c transferred to Capital Reserve A/c)

   
   

419500

419500

Working Notes :

(1) Amount forfeited by the company on 100 shares forfeited = 100 × (30 + 30) = 100 × 60 = ₹ 6,000

(2) Calls-in-Arrears = 100 × 40 = ₹ 4,000.

(3) Amount received on re-issue of 100 forfeited shares = 100 × 75 = ₹ 7,500. Balance of ₹ 2,500 (i.e. loss 25 × 100) is transferred to Share Forfeiture A/c.

(4) Amount transfer from Share Forfeiture A/c to Capital Reserve is ascertained by preparing Share Forfeiture A/c.

 

                                                                                                                     Share Forfeiture A/c

Date

Particulars

J.F

Amt (₹ )

Date

Particulars

J.F

Amt (₹ )

8

To Equity Share Capital A/c

 

2,500

7

By Equity Share Capital A/c

 

6,000

9

To Capital Reserve A/c (Balancing figure)

 

3,500

    
   

6,000

   

6,000