UNIT 1 | unit 1 accounting for share capital and debentures

Back to Study material

UNIT 1

Accounting for Share Capital & Debentures

Question Bank:

Q1). Venture Ltd. Will issue 10,000 shares of Rs 100 per share. The payment amount is as follows.

January 1, 2018, Rs 20 at application

February 1, 2018, allocation Rs 50

Rs 30 on the first and last phone calls on March 1, 2018.

Display the required journals if:

The company receives an application for 10,000 shares and allocates all shares appropriately.
We accept applications for 9,500 shares and allocate all shares appropriately.
The company receives an application for 12000 shares. We accept applications for 10,000 shares and reject the remaining applications. Allocate all shares appropriately.

A1).

Full subscription:

Journal

In the book of Venture Co., Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1 Jan	Bank A/c	Dr.	200000
	To Share Application A/c	Cr.		200000
	(Being application money received on 10000 shares @20 per share)
1 Feb	Share Application A/c	Dr.	200000
	To Share Capital A/c	Cr.		200000
	(Being share application money transferred to share capital)
1 Feb	Share Allotment A/c	Dr.	500000
	To Share Capital A/c	Cr.		500000
	(Being share allotment due on 10000 shares @50 per share)
1 Feb	Bank A/c	Dr.	500000
	To Share Allotment A/c	Cr.		500000
	(Being share allotment money received)
1 Mar	Share First and Final Call A/c	Dr.	300000
	To Share Capital A/c	Cr.		300000
	(Being money on share call due on 10000 shares @30 per share)
1 Mar	Bank A/c	Dr.	300000
	To Share First and Final Call A/c	Cr.		300000
	(Being share call amount received)

2. Under Subscription:

Journal Entries

In the books of Venture Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1 Jan	Bank A/c	Dr.	190000
	To Share Application A/c	Cr.		190000
	(Being application money received on 9500 shares @20 per share)
1 Feb	Share Application A/c	Dr.	190000
	To Share Capital A/c	Cr.		190000
	(Being share application money transferred to share capital)
1 Feb	Share Allotment A/c	Dr.	475000
	To Share Capital A/c	Cr.		475000
	(Being share allotment due on 9500 shares @50 per share)
1 Feb	Bank A/c	Dr.	475000
	To Share Allotment A/c	Cr.		475000
	(Being share allotment money received)
1 Mar	Share First and Final Call A/c	Dr.	285000
	To Share Capital A/c	Cr.		285000
	(Being money on share call due on 9500 shares @30 per share)
1 Mar	Bank A/c	Dr.	285000
	To Share First and Final Call A/c	Cr.		285000
	(Being share call amount received)

3. Over-Subscription:

Journal Entries

In the books of Venture Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1 Jan	Bank A/c	Dr.	240000
	To Share Application A/c	Cr.		240000
	(Being application money received on 12000 shares @20 per share)
1 Feb	Share Application A/c	Dr.	240000
	To Share Capital A/c	Cr.		200000
	To Bank A/c	Cr.		40000
	(Being share application money transferred to share capital and excess refunded)
1 Feb	Share Allotment A/c	Dr.	500000
	To Share Capital A/c	Cr.		500000
	(Being share allotment due on 10000 shares @50 per share)
1 Feb	Bank A/c	Dr.	500000
	To Share Allotment A/c	Cr.		500000
	(Being share allotment money received)
1 Mar	Share First and Final Call A/c	Dr.	300000
	To Share Capital A/c	Cr.		300000
	(Being money on share call due on 10000 shares @30 per share)
1 Mar	Bank A/c	Dr.	300000
	To Share First and Final Call A/c	Cr.		300000
	(Being share call amount received)

Q2). Sahni Ltd. Will issue 10,000 shares of Rs 100 each with a 25% premium. Insurance premiums must be paid at the time of allocation. The payment amount is as follows.

January 1, 2018: Rs 20 at application
February 1, 2018: Allocation Rs 75
March 1, 2018: Rs 30 on first and last phone calls.

The company makes allotment properly. Show necessary journal entries.

A2) Journal Entries

In the books of Sahni Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1 Jan	Bank A/c	Dr.	200000
	To Share Application A/c	Cr.		200000
	(Being application money received on 10000 shares @20 per share)
1 Feb	Share Application A/c	Dr.	200000
	To Share Capital A/c	Cr.		200000
	(Being share application money transferred to share capital)
1 Feb	Share Allotment A/c	Dr.	750000
	To Share Capital A/c	Cr.		500000
	To Securities Premium A/c	Cr.		250000
	(Being share allotment due on 10000 shares @50 per share)
1 Feb	Bank A/c	Dr.	750000
	To Share Allotment A/c	Cr.		750000
	(Being share allotment money received)
1 Mar	Share First and Final Call A/c	Dr.	300000
	To Share Capital A/c	Cr.		300000
	(Being money on share call due on 10000 shares @30 per share)
1 Mar	Bank A/c	Dr.	300000
	To Share First and Final Call A/c	Cr.		300000
	(Being share call amount received)

Q3). If the company does not amortize, how will the balance of the "Share A / c Issuance Discount" be treated? What happens to the journal if the shares are issued at a discounted price and all the money is recalled at the time of application? Number of shares = 100, face value = Rs.10, discount = Rs.1

A3). The company displays it on the asset-side balance sheet under the heading "Other Expenditures." This is a fictitious asset and is not compulsory, but must be gradually amortized by transfer to P & L A / c.

Journal

Date	Particulars	L.F.	Amount Dr.	Amount Cr.
XXX	Bank A/c Dr.		900
	To Share Application and Allotment A/c Cr.			900
	(Being the amount received after discount)
XXX	Share Application and Allotment A/c Dr.		900
	Discount on Issue of Shares A/c Dr.		100
	To Share Capital A/c Cr,			1,000
	(Being the allotment done)

Q4). MV Ltd. Will purchase the machine from Honda Enterprises for Rs 500,000. Pay the amount to be paid in the form of fully paid shares. Calculate the number of shares at the time of issuance.

A share with a face value of Rs 100.
A Rs 25 premium share with a face value of Rs 100.

A4).

Number of shares = {Amount Payable to the Vendor}

____________________________

{Issue Price of the shares}

= {500000}

___________

{100}

= 5000 shares

2. Number of shares = {Amount Payable to the Vendor}

_____________________________________________________________

{Issue Price of the shares}

= {500000}

________________________

{125}

= 4000 shares

Q5). Rudra Ltd. Will buy the building from Sun Enterprises for Rs 650,000. We will pay Rs 300,000 in cash and issue fully paid shares of Rs 10 each face value to the balance. It will also issue 50,000 fully paid-in shares to the promoter. Pass the required journals.

A5). Journal Entries

In the books of Rudra Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1.	Building A/c	Dr.	650000
	To Share Capital A/c	Cr.		350000
	To Bank A/c	Cr.		300000
	(Being money paid and shares issued to the vendor for payment of assets purchased)
2.	Goodwill A/c	Dr.	500000
	To Share Capital A/c	Cr.		500000
	(Being fully paid-up shares issued to promoters for services rendered by them)

Q6). Indore Coir Mills Ltd. Has issued 2,000,000 shares with 5,000,000 shares each with registered capital of Rs 10, Rs 3 at the time of application, Rs 2 at the time of allocation, Rs 3 on the first call, Rs 2 for the second and last call.

The company legitimately receives the allotted amount. One shareholder holding 6,000 shares pays the second and last call along with the first call. The five shareholders, who hold a total of 10,000 shares, did not pay the first call for shares. The company did not make the final call.

Pass the journal to record the transaction.

A6) In the Books of Indore Coir Mills Ltd.

JOURNAL

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1.	Bank a/c (2,00,000 @ ₹ 3)	Dr.	6,00,000
	To Equity Shares Application a/c	Cr.		6,00,000
	(Being application money received)
2.	Equity Shares Application a/c	Dr.	6,00,000
	To Equity Shares Capital a/c	Cr.		6,00,000
	(Being application money transferred to Equity Share Capital Account)
3.	Equity Shares Allotment a/c (2,00,000@ ₹2 per share)	Dr.	4,00,000
	To Equity Share Capital a/c	Cr.		4,00,000
	(Being amount due on allotment)
4.	Bank a/c	Dr.	4,00,000
	To Equity Shares Capital a/c	Cr.		4,00,000
	(Being allotment money received)
5.	Equity Shares First Call a/c (2,00,000 @ ₹ 3 per share)	Dr.	6,00,000
	To Equity Share Capital a/c	Cr.		6,00,000
	(Being first call money due)
6.	Bank a/c	Dr.	5,82,000
	To Equity Shares First Call a/c	Cr.		5,70,000
	To Calls-In-Advance a/c			12,000
	(Being first call money received on 1,90,000 shares @ ₹ 3 per share and ₹ 2 per share on 6,000 shares received in advanced)

Balance Sheet of Indore Coir Mills Ltd As At…

	Particulars	Note No.	Amount
I	EQUITY AND LIABILITIES
	1 Shareholders’ Funds
	Share Capital	1	15,70,000
	2 Current Liabilities
	Other Current Liabilities	2	12,000
	Total		15,82,000
II	ASSETS
	Current Assets
	Cash and Cash Equivalents	3	15,82,000
	Total		15,82,000

Notes to Accounts

1	Share Capital
	Authorized Capital
	5,00,000 Equity Shares of ₹10 each	50,00,000
	Issued Capital
	2,00,000 Equity Shares of ₹ 10 each	20,00,000
	Subscribed Capital
	Subscribed but not fully paid-up
	2,00,000 Equity Shares of ₹ 10 each; ₹ 8 called-up 16,00,000
	Less: Calls-in-Arrears(10,000 x ₹ 3 ) 30,000	15,70,000
2	Other Current Liabilities
	Calls-in-Advance	12,000
3	Cash and Cash Equivalents
	Cash at Bank	15,82,000

Q7). Arihant Ltd. Co. Will issue 100,000 shares with a face value of Rs 10 on June 1, 2018 at a premium of 20%. Payment arrangements are as follows:

June 1, 2018: Rs 2 at application
July 1, 2018: Allocations including Premium Rs 7
September 1, 2018: Rs 3 on first and last call

The company is accepting applications for 285,000 shares. It treats them in the following ways:

Applicants for 25,000 shares will receive the full amount.
Applicants for 225,000 shares will receive one share for every three shares submitted in proportion.
Refuse to apply for 35,000 shares.

The company legitimately receives the full amount. Pass the required journals.

A7). Journal

In the book of Arihant Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1 June	Bank A/c	Dr.	570000
	To Share Application A/c			570000
	(Being application money received for 285000 shares@ ₹2 each)
1 July	Share Application A/c	Dr.	570000
	To Share Capital A/c			200000
	To Share Allotment A/c			300000
	To Bank A/c			70000
	(Being share application money on 100000 shares @ ₹ 2 each, transferred to share capital, on 225000 shares adjusted towards allotment and on 35000 shares refunded)
1 July	Share Allotment A/c	Dr.	700000
	To Share Capital A/c			500000
	To Securities Premium A/c			200000
	(Being share allotment due on 100000 shares @ ₹ 7 each including a premium of ₹2)
1 July	Bank A/c	Dr.	400000
	To Share Allotment A/c			400000
	(Being share allotment money received)
1 Sept	Share Final Call A/c	Dr.	300000
	To Share Capital A/c			300000
	(Being money on share call due on 100000 shares @ ₹3 each,)
1 Sept	Bank A/c	Dr.	300000
	To Share Final Call A/c			300000
	(Being share call amount received)

Working Notes:

Category	No. Of shares applied	No. Of shares allotted	Amount received on the application	Application money required	Adjusted towards allotment	Amount due on allotment	Amount received on the allotment	Refund
a.	25000	25000	50000	50000	Nil	175000	175000	Nil
b.	225000	75000	450000	150000	300000	525000	225000	Nil
c.	35000	Nil	70000	Nil	Nil	Nil	Nil	70000
Total	285000	100000	570000	200000	300000	700000	400000	70000

Q8). Enter the journals related to Stock Forfeiture if:

ABC Ltd. Has issued 10,000 shares of Rs 10 each with a premium of Rs 2 per share. The amount will be paid as Rs 4 per share in the application, Rs 5 per share (including premium) in the allocation and Rs 3 per share in the first and last calls.

The company has granted Gaurav 200 shares.

Case 1: If Gaurav does not pay the quota and then the first and last phone calls, the company loses his shares.

Case 2: Gaurav fails to pay the first and last phone calls and the company confiscates his shares.

A8). Journal Entries

IN THE BOOKS OF ABC LTD.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
Case 1	Equity Share Capital A/c (200 x ₹ 10)	Dr.	2,000
	Securities Premium A/c (200 x ₹ 2)	Dr.	400
	To Shares Allotment A/c (200 x ₹ 5)	Cr.		1,000
	To Forfeited Shares A/c (200 x ₹ 4)	Cr.		800
	To First and final Call A/c (200 x ₹ 3)	Cr.		600
	(Being 200 shares forfeited for non-payment of allotment and first and final call money)
Case 2	Equity Share Capital A/c (200 x ₹ 10)	Dr.	2,000
	To Forfeited Shares A/c (200 x ₹ 7)	Cr.		1,400
	To First and final Call A/c (200 x ₹ 3)	Cr.		600
	(Being 200 shares forfeited for non-payment of first and final call money)

Q9). XYZ Ltd. Will charge Rs 2 per share on the application, Rs 3 per share on the allotment, Rs 3 per first and last call, and Rs 2 per share on the second and last call. Issued 5,000 shares of Rs 10.The company has allocated 40 shares to Mr. Ashish.

Case 1: Mr. Ashish fails to pay the allowance and the company confiscates his shares.

Case 2: If Ashish does not pay the first call and then the last call, the company loses his shares.

A9). Journal Entries

IN THE BOOKS OF XYZ LTD.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
Case 1	Equity Share Capital A/c ( 40 x ₹ 5)	Dr.	200
	To Shares Allotment A/c ( 40 x ₹ 3)	Cr.		120
	To Forfeited Shares A/c (40 x ₹ 2)	Cr.		80
	(Being 40 shares forfeited for non-payment of allotment money )
Case 2	Equity Share Capital A/c (40 x ₹ 10)	Dr.	400
	To Forfeited Shares A/c (40 x ₹ 5)	Cr.		200
	To Shares First Call A/c (40 x ₹ 3)	Cr.		120
	To Shares Second and Final Call A/c (40 x ₹ 2)	Cr.		80
	(Being 40 shares forfeited for non-payment of first and second and final call)

Q10).MN Ltd. Will issue 100,000 shares at a par value of Rs 10 with a premium of Rs 2 per share. The payment amount is as follows.

Application: Rs 3

Allocation: Rs 6 including premium

First and Last Calls: Unpaid Balance

The company receives a full subscription. A, Shareholders holding 1000 shares will neglect to pay the allowance and telephone until the due date. As a result, the company loses his stake. We will then reissue these shares to B for Rs 11 per fully paid-in share. Pass the required journals to MN Ltd.’s books.

A10).

Journal

In the book of MN Ltd.

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1.	Bank A/c	Dr.	300000
	To Share Application A/c	Cr.		300000
	(Being application money received on 100000 shares @ ₹3 per share)
2.	Share Application A/c	Dr.	300000
	To Share Capital A/c	Cr.		300000
	(Being share application money transferred to share capital)
3.	Share Allotment A/c	Dr.	600000
	To Share Capital A/c	Cr.		400000
	To Securities Premium A/c	Cr.		200000
	(Being share allotment due on 100000 shares @₹6 per share including premium)
4.	Bank A/c	Dr.	594000
	To Share Allotment A/c	Cr.		594000
	(Being share allotment money received on 99000 shares @₹6 each)
5.	Share First and Final Call A/c	Dr.	300000
	To Share Capital A/c	Cr.		300000
	(Being money on share call due on 100000 shares @₹3 per share)
6.	Bank A/c	Dr.	297000
	To Share First and Final Call A/c	Cr.		297000
	(Being share call amount received on 99000 shares @₹3)
7.	Share Capital A/c (1000 x ₹10)	Dr.	10000
	Securities Premium A/c (1000 x ₹2)	Dr.	2000
	To Share Allotment A/c (1000 x ₹6)	Cr.		6000
	To Share First and Final Call A/c (1000 x ₹3)	Cr.		3000
	To Forfeited Shares A/c	Cr.		3000
	(Being forfeiture of 1000 shares for non-payment of allotment and call money as per the Board’s Resolution No….dated…..)
8.	Bank A/c (1000 x ₹11)	Dr.	11000
	To Share Capital A/c	Cr.		10000
	To Securities Premium A/c	Cr.		1000
	(Being 1000 forfeited shares re-issued @ ₹11 each as per the Board’s Resolution no… dated….)
9.	Forfeited Shares A/c	Dr.	3000
	To Capital Reserve A/c	Cr.		3000
	(Being profit on re-issue of the shares transferred to capital reserve)

Q11). X company Ltd. Forfeited 200 shares of 10 each, fully called up on which 7 have been received and final call of 3 per share remains unpaid. These shares were later on reissued for 8 per share fully paid up. Make journal entry for recording the forfeiture and reissue of shares.

A11).

Date	Particulars	L.F.	Dr.	Cr.
(i)	Share Capital A/c Dr. To Share Forfeited A/c To Share Final Call A/c (Forfeiture of 200 shares of 10 each due to non-payment of final call of 3 per share)		2,000
				1,400
				600
(ii)	Bank A/c Dr. Share Forfeited A/c Dr. To Share capital A/c (Reissue of 200 forfeited shares of 10 each for 8 per share as fully paid up)		1,600
			400
				2,000
(iii)	Share forfeited A/c Dr. To Capital Reserve A/c (The Balance amount in Share Forfeited A/c transferred to Capital Reserve A/c)		1,000
				1000

Q12). Y Ltd. Forfeited 400 shares of 20 each, on which 15 per share have been received and balance remains due but not paid. These shares were reissued

(a) at the rate of 20 per share i.e. at par

(b) at the rate of 24 per share i.e. at premium Make necessary journal entries for reissue of the shares

A12).

Date	Particulars		L.F.	Dr.	Cr.
Case (a)
(i)	Bank A/c To Share Capital A/c (Reissue of 400 share at the rate Of 20 per share)	Dr.		8,000
		Dr.			8,000
(ii)	Shares Forfeited A/c To Capital Reserve A/c (Balance amount of Share Forfeited A/c is transferred to Capital Reserve A/c)	Dr.		6,000
		Dr.			6,000
Case (b)
(i)	Bank A/c To Share Capital A/c To Securities Premium Reserve A/c (Reissue of forfeited shares at premium)	Dr.		9,600
		Dr.			8,000 1,600
(ii)	Share Forfeited A/c To Capital Reserve A/c (Balance amount of Shares Forfeited A/c is transferred to Capital Reserve A/c)	Dr.		6,000
		Dr.			6,000

Q13). India infrastructure Ltd. Has issued its shares of 20 each at a discount of 2 per share. Mahima holding 100 shares did not pay final call of 5 per share. Her shares were forfeited. Later on the company reissued these forfeited shares at (I) 15 per share (II) 20 per share, and (III) 25 per share

Make journal entries for the forfeiture and reissue of the shares in the books of company.

A13).

Particulars	L.F.	Dr.	Cr.
Share Capital A/c Dr. To Share Forfeited A/c To Discount on Issue of Shares A/c To Share Final Call A/c (Forfeiture of 100 shares issued at discount For non payment of final call)		2,000
			1,300
			200
			500

Reissue of shares: Reissued at 15 per share

	Particulars	L.F.	Dr.	Cr.
I.	(i) Bank A/c Dr. Discount on Issue of Shares A/c Dr. Share Forfeited A/c Dr. To Share Capital A/c (100 shares reissued at 15 per share)		1500 200 300
				2,000
	(ii) Share Forfeited A/c Dr. To Capital Reserve A/c (Balance in share Forfeited A/c of 100 shares reissued transferred to Capital Reserve A/c)		1,000
				1,000
II.	Bank A/c Dr. To Share Capital A/c (100 shares reissued at 20 per share)		2,000 1,300	2,000 1,300
II.	Share Forfeited A/c Dr. To Capital Reserve A/c (Balance in shares forfeited A/c transferred to Capital Reserve A/c)		2,000 1,300	2,000 1,300
III.	Reissued at 25 per share Bank A/c Dr. To Share Capital A/c To Securities Premium Reserve A/c (Reissue of discounted shares at 25 per share)
			2,500
				2,000 500
	Shares Forfeited A/c Dr. To Capital Reserve (Balance in shares forfeited A/c transferred to capital Reserve A/c)		1,300
				1,300

Q14). A company forfeited 40 shares of 50 each on which only application money of 10 per share and 20 on allotment were received. Final call of the 20 per share is not received 30 of these shares are reissued at 40 per share. Make journal entries for forfeiture and Reissue of forfeited shares.

A14).

Particulars	L.F.	Dr.	Cr.
Share Capital A/c Dr. To Share Forfeited A/c To Share First and Final Call A/c (40 shares forfeited for non-payment of call)		2,000
			1,200
			800
Bank A/c Dr. Share Forfeited A/c Dr. To Share Capital A/c (30 of the forfeited shares are reissued)		1,200
		300
			1,500
Share forfeited A/c Dr. To Capital Reserve A/c (Balance of forfeited A/c of 30 shares transferred to capital Reserve A/c)		600
			600

Q15). AZ Ltd. Forfeited 200 shares of 10 each originally issued at a premium of 4 per share, the holder of which paid 3 per share on application but did not pay the allotment money of 7 per share (including premium) and call of 4 per share. Make necessary journal entries for the forfeiture and for reissue of these shares if:

I. Reissued at 10 per share i.e., at par

II. Reissued at 8 per share i.e., at discount

III. Reissued at 12 per share i.e., at premium

Particulars

L.F.

Dr.

Cr.

(i)

Share Capital A/c (200 × 10) Dr. Securities Premium Reserve A/c (200 × 4) Dr.

To Share Forfeited A/c (200 × 3) To Share Allotment A/c (200 × 7)

To Share First & Final Call A/c (200 × 4)

(Forfeiture of 200 shares for non-payment of dues)

2,000

800

600

1,400

800

A15).

Case I

	Particulars	L.F.	Dr.	Cr.
(i)	Bank A/c Dr. To Share Capital A/c (Reissue of 200 forfeited shares reissued at par)		2,000
				2,000
(ii)	Share Forfeited A/c Dr. To Capital Reserve A/c (Share Forfeited A/c balance is transferred to Capital Reserve A/c)		600
				600

As the forfeited shares have been reissued at par therefore no discount is allowed on these shares at the time of their reissue. Therefore the full forfeited amount of 600 is a gain for the company which is transferred to Capital Reserve A/c

Case 2

	Particulars	L.F.	Dr.	Cr.
(i)	Bank A/c Dr. Share Forfeited A/c Dr. To Share Capital (Reissue of 200 forfeited shares reissued at discount)		1,600 400
				2,000
(ii)	Share Forfeited A/c Dr. To Capital Reserve A/c (Balance amount of Shares Forfeited A/c is transferred to Capital Reserve A/c)		200
				200

At the time of reissue of forfeited shares a discount of 2 per share is allowed so the total amount of discount of 400 is adjusted from the forfeited amount of 600 and the balance amount of 200 is transferred to Capital Reserve A/c being a capital gain.

Case 3

	Particulars	L.F.	Dr.	Cr.
(i)	Bank A/c Dr. To Share Capital A/c To Securities Premium Reserve A/c (200 forfeited shares reissued at premium)		2,400
				2,000 400
(ii)	Share Forfeited A/c Dr. To Capital Reserve A/c (Balance amount of Share Forfeited A/c transferred to Capital Reserve)		600
				600

Q16). The Delhi Artware Ltd. Issued 500 equity shares of Rs. 100 each and 1,000 preference shares of Rs. 100 each. The Share Capital was to be collected as under:

	Equity Shares Rs.	Preference Shares Rs.
On Application	25	20
On Allotment	20	30
First Call	30	20
Final Call	25	30

All these shares were subscribed. Prepare the cash book and journalise the remaining transactions in the books of the company.

A16). Delhi Artware Ltd. Cash Book

Dr.	Rs.		Cr. Rs.
To Equity Shares application &		By Balance	1,44,400
Allotment Account (application Money on 500 shares at Rs. 25)	12,500	c/d
To Preference Share Application & Allotment A/c (application money on 1,000 shares at Rs. 20) To Equity Share Applications & Allotment A/c (allotment money on 1,000 shares at Rs. 20) To Preference Share Application &	20,000 10,000
Allotment A/c (allotment money on 1,000 shares at Rs. 30)	30,000
To Equity Shares First Call A/c (Rs. 30 on 500 shares) To Preference Share First Call A/c (Rs.20 on 1,000 shares) To Equity Shares Final Call A/c (Rs.25 on 420 shares) To Preference Share Final A/c (Rs. 30 on 880 shares) To Balance b/d	15,000 20,000 10,500 26,400 1,44,400 1,44,000		1,44,000

Journals

Dr.

Rs.

Cr.

Rs.

Equity Share Application &

Allotment A/c Dr.

To Equity Share Capital A/c

22,500

Preference Share Application & Allotment A/c Dr.

To Preference Share Capital A/c

50,000

Equity Share First Call A/c Dr.

To Equity Share Capital A/c

15,000

Preference Share First Call A/c Dr.

To Preference Share Capital A/c

20,000

Equity Share Final Call A/c Dr.

To Equity Share Capital A/c

12,500

Preference Share Final Call A/c Dr.

To Preference Share Capital A/c

30,000

Q17). JHP Limited is a company with an authorised share capital of Rs. 10,00,000 in equity shares of Rs. 10 each, of which 6,00,000 shares had been issued and fully paid on 30th June, 2005. The company proposed to make a further issue of 1,00,000 of these Rs. 10 shares at a price of Rs. 14 each, the arrangements for payment being:

(a) Rs. 2 per share payable on application, to be received by 1st July, 2005;

(b) Allotment to be made on 10th July, 2005 and a further Rs. 5 per share (including the premium to be payable;

Application was received for 3,55,000 shares and were dealt with as follows:

Applicants for 5,000 shares received allotment in full;
Applicants for 30,000 shares received an allotment of one share for every two applied for; no money was returned to these applicants, the surplus on application being used to reduce the amount due on allotment;
Applicants for 3,20,000 shares received an allotment of one share for every four applied for; the money due on allotment was retained by the company, the excess being returned to the applicants; and
The money due on final call was received on the due date.

You are required to record these transactions (including cash items) in the Journal of JHP Limited.

A17). Journal of JHP Limited

Date 2005	Particulars		Dr. Rs.	Cr. Rs.
July 1	Bank A/c (Note 1-Column 3) To Equity Share Application A/c	Dr.	7,10,000	7,10,000

July 10	Equity Share Application A/c To Equity Share Capital A/c To Equity Share Allotment A/c	Dr.	7,10,000	2,00,000 4,30,000
	(Note 1 Column 5) To Bank A/c (Note 1-Column 6) Equity Share Allotment A/c To Equity Share Capital A/c To Securities Premium A/c Bank A/c (Note 1- Column 8) To Equity Share Allotment A/c	Dr. Dr.	5,00,000 70,000	80,000 1,00,000 4,00,000 70,000
2006 ?	Equity Share Final Call A/c To Equity Share Capital A/c	Dr.	7,00,000	7,00,000
April 30	Bank A/c To Equity Share Final Call A/c	Dr.	7,00,000	7,00,000

Working Notes:

(1) Calculation for Adjust. And Refund