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Question:

VXN Ltd. invited applications for issuing 50,000 equity shares of Rs.10 each at a premium of Rs.8 per share. The amount was payable as follows: On Application Rs.4 per share (including Rs.2 premium). On Allotment Rs.6 per share (including Rs.3 premium). On First Call Rs.5 per share (including Rs.1 premium). On Second and Final Call Balance Amount. The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal's shares were immediately forfeited after allotment. Afterwards, the first call was made. Krishna, a holder of 100 shares, failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna's shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received. All the forfeited shares were reissued at Rs.9 per share fully paid up. Pass necessary Journal Entries for the above transactions in the books of the company.

Solution:

SN Particulars Dr. Cr.

  1. Bank A/C Dr.To Share Application A/C[Being Application money received] 2,00,000 2,00,000
  2. Share Application A/C Dr.To Share Capital A/CTo Securities Premium A/C[Being Application money transferred to capital A/C] 2,00,000 1,00,000 1,00,000
  3. Equity share allotment A/C Dr.To Equity share capital A/CTo Security Premium A/C[Being share allotment money due] 3,00,000 1,50,000 1,50,000
  4. Bank A/C Dr.Call in Arreas A/C Dr.To Call in advance A/C (Madhav)To share Allotment A/C[Being share allotment amount received for 49,800 share, Madhav paid advance for 400 shars] 2,98,800 1,200 3,00,000
  5. Share capital A/C Dr.Security premium A/C Dr.To Equity share allotment A/CTo Share forfeiture A/C[Being share forfeited] 1,000 1,000 1,200 800
  6. Equity share first call A/C Dr.To Equity share capital A/CTo Security premium A/C[Being first call is Due] 2,50,000 2,00,000 50,000
  7. Bank A/C Dr.Call in Arrear A/C Dr.To Equity share first call A/CTo Call in advances A/C(Being first call received) 2,47,900 1,000 2,48,000 900
  8. Call-in-advance (Madhav) Dr.To Equity share first call A/C(Being call in advance adjusted) 2,000 2,000
  9. Equity share capital A/C Dr.Security premium A/C Dr.To First call A/CTo Forfeiture A/C(Being equity share forfeiture) 900 600 500 1,000
  10. Equity share final call A/C Dr.To Equity share capital A/CTo Security premium A/c(Being final call raised) 1,50,000 50,000 1,00,000
  11. Bank A/C Dr.To Equity share final call(Being final call received) 1,47,000 1,47,000
  12. Call in advance Dr.To Equity share final call(Being call in advance adjusted) 2,100 2,100
  13. Bank A/C Dr.Forfeiture share A/C Dr.To Share capital A/C[Being forfeited share reissued] 2,700 300 3,000
  14. Forfeiture share A/C Dr.To Capital reserve A/C[Being forfeiture A/C transferred] 1,500 1,500