NOTES


CA-Foundation > Principles and Practice of Accounting > Company Accounts - Issue, Forfeiture and Re-Issue of Shares (Old & New)

B Ltd. issued 20,000 equity shares of Rs.100 each at a premium of Rs.20 per share payable as follows: on application Rs.50; on allotment Rs.50 (including premium); on final call  Rs.20. Applications were received for 24,000 shares. Letters of regret were issued to applicants for 4,000 shares and shares were allotted to all the other applicants. Mr. A, the holder of 150 shares, failed to pay the allotment and call money, the shares were forfeited. Show the Journal Entries and Cash Book in the books of B Ltd.



Ans.

In the Books of B Ltd.

Cash Book (Bank column only)

Date

Particulars

Rs.

Date

Particulars

Rs.

 

To Equity Share

     Application A/c

(Being application money received on 24,000 shares @ Rs.50 each)

12,00,000

 

By Equity Share

     Application A/c

(Being excess money refunded

on 4,000 shares @ Rs.50 each as

per Board’s Resolution No...

dated....)

2,00,000

 

To Equity Share Allotment A/c

(Being allotment money received on 19,850 shares @ Rs.50 each)

 

9,92,500

 

By balance c/d

23,89,500

 

To Equity Share Final Call A/c

(Being final call money received on 19,850 shares @ Rs. 20 each)

3,97,000

 

 

 

 

 

25,89,500

 

 

25,89,500

  Journal Entries

Date

Particulars

Rs.

Rs.

 

Equity Share Application A/c    Dr.

   To Equity Share Capital A/c

(Being application money on 20,000 shares @Rs.50 each transferred to Equity Share Capital Account as per Board’s Resolution No.....dated...)

10,00,000

 

10,00,000

 

Equity Share Allotment A/c       Dr.

   To Equity Share Capital A/c

   To Securities Premium A/c

(Being allotment money @ Rs.50 per share including premium of

Rs.20 per share being made due as per Board’s Resolution No......

dated....)

10,00,000

 

6,00,000

4,00,000

 

Equity Share Capital A/c (150 xRs.100)            Dr.

Securities Premium A/c (150 xRs.20)               Dr.   

  To Equity Share Allotment A/c

  To Equity Share Final Call A/c

  To Forfeited Shares A/c

(Being forfeiture of 150 shares for non-payment of allotment money and final call money as per Board’s Resolution No....dated...)

15,000

3,000

 

 

7,500

3,000

7,500

Note: Here, securities premium on forfeited shares has not been realised, so Securities Premium Account will be debited at the time of forfeiture of these shares.

Also, alternatively Calls in arrears A/c could have been used in which case following entries would have been passed in place of the entry (given above) for forfeiture:

On non- receipt of allotment money:

Calls in Arrears A/c              Dr.

   To Equity Share Allotment A/c

(Being allotment money on 150 shares @Rs.50 not received transferred to calls in arrears.)

7,500

 

7,500

On non - receipt of Call money:

Calls in Arrears A/c             Dr.

   To Equity Share Final Call A/c

(Being final call on 150 shares @ Rs.20 not received transferred to calls in arrears)

3,000

 

3,000

 On Forfeiture:

Share Capital A/c (150 x Rs.100)                   Dr.         

Securities Premium A/c (150 x Rs.20)            Dr.

    To Calls in Arrears A/c

    To Share Forfeiture A/c

(Being forfeiture of 150 shares for non-payment of allotment money and final call money as per Board’s Resolution No....dated...)

15,000

3,000

 

 

10,000

7,500

 


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Notes of Company Accounts - Issue, Forfeiture and Re-Issue of Shares (Old & New)



  1.       Calls-in-Arrears and Calls-in-advance


    see in detail

  2. Issue of shares for cash and Issue of Shares for Consideration other than Cash
    see in detail

  3. X Ltd. invited applications for 10 lakhs shares of Rs.100 each payable as follows:

     

    Rs.

    On Application

    20

    On Allotment (on 1st May, 2016)

    30

    On First Call (on 1st Oct., 2016)

    30

    On Final Call (on 1st Feb., 2017)

    20

    All the shares were applied for and allotted. A shareholder holding 20,000 shares paid the whole of the amount due along with allotment. Journalise the transactions, assuming all sums due were received. Interest was paid to the shareholder concerned on 1st February, 2017.


    see in detail

  4. A limited Company, with an authorized capital of Rs.20,00,000 divided into shares of ` 100 each, issued for subscription 10,000 shares payable at Rs.25 per share on application, Rs.30 per share on allotment, Rs.20 per share on first call three months after allotment and the balance as and when required.

    The subscription list closed on January 31, 2016 when application money on 10,000 shares was duly received and allotment was made on March 1, 2016.The allotment amount was received in full but, when the first call was made, one shareholder failed to pay the amount on 1,000 shares held by him and another shareholder with 500 shares paid the entire amount on his shares.

    Give journal entries in the books of the Company to record these share capital transactions assuming that all amounts due were received within one month of the date they were called.


    see in detail

  5. B Ltd. issued 20,000 equity shares of Rs.100 each at a premium of Rs.20 per share payable as follows: on application Rs.50; on allotment Rs.50 (including premium); on final call  Rs.20. Applications were received for 24,000 shares. Letters of regret were issued to applicants for 4,000 shares and shares were allotted to all the other applicants. Mr. A, the holder of 150 shares, failed to pay the allotment and call money, the shares were forfeited. Show the Journal Entries and Cash Book in the books of B Ltd.


    see in detail


CA-Foundation - Principles and Practice of Accounting:

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