X Ltd. invited applications for issuing 50,000 equity shares of Rs.10 each. The amount was payable as follows: On Application: Rs.2 per share, On Allotment: Rs.2 per share, On First Call: Rs.3 per share, On Second and Final Call: Balance amount. Applications for 70,000 shares were received. Applications for 10,000 shares were rejected and the application money was refunded. Shares were allotted to the remaining applicants on a pro-rata basis, and excess money received with applications was transferred towards sums due on allotment and calls, if any. Gopal, who applied for 600 shares, paid his entire share money with application. Ghosh, who had applied for 6,000 shares, failed to pay the allotment money and his shares were immediately forfeited. These forfeited shares were re-issued to Sultan for Rs.20,000; Rs.4 per share paid up. The first call money and the second and final call money were called and duly received. Pass necessary journal entries for the above transactions in the books of X Ltd., Open Calls-in-Advance Account and Calls-in-Arrears Account wherever necessary.

1. Application Money Received:

• 70,000 shares applied for × Rs.2 per share = Rs.140,000
• Journal Entry:
  Dr. Bank Account Rs. 140,000
  Cr. Share Application Account Rs. 140,000

2. Refund of Application Money:

• 10,000 shares rejected × Rs.2 per share = Rs.20,000
• Journal Entry:
  Dr. Share Application Account Rs. 20,000
  Cr. Bank Account Rs. 20,000

3. Allotment of Shares:

• Remaining applications: 70,000 - 10,000 = 60,000 shares
• Pro-rata allotment: 50,000 shares / 60,000 applications = 5/6 shares per application

4. Allotment Money Received:

• Shares allotted: 50,000 shares
• Allotment money per share: Rs.2
• Total allotment money: 50,000 shares × Rs.2 = Rs.100,000
• Gopal's allotment money: 600 shares × Rs.2 = Rs.1200 (already paid with application)
• Ghosh's allotment money: 5000 shares × Rs.2 = Rs.10,000 (not paid)
• Allotment money received (excluding Gopal and Ghosh): Rs.100,000 - Rs.1200 = Rs.98800
• Journal Entry:
  Dr. Bank Account Rs. 98800
  Dr. Calls-in-Advance Account Rs. 1200
  Cr. Share Allotment Account Rs. 100,000

5. Forfeiture of Shares:

• Ghosh's shares forfeited: 5000 shares
• Money received from Ghosh: Rs.10000 (application money)
• Amount to be written off: 5000 shares * (Rs.2 + Rs.2) = Rs.20000
• Journal Entry:
  Dr. Share Allotment Account Rs. 10000
  Dr. Share Forfeiture Account Rs. 10000
  Cr. Share Capital Account Rs. 20000

6. Re-issue of Forfeited Shares:

• Re-issued to Sultan for Rs.20,000 (Rs.4 per share paid up)
• Journal Entry:
  Dr. Bank Account Rs. 20000
  Cr. Share Forfeiture Account Rs. 10000
  Cr. Share Capital Account Rs. 10000

7. First Call Money Received:

• First call amount per share: Rs.3
• Total amount due: Rs.3 * 50,000 shares = Rs. 150,000
• Gopal's first call: Rs.3*600 = Rs. 1800 (Already paid in application money)
• First call money received: Rs.150,000 - Rs.1800 = Rs. 148200
• Journal Entry:
  Dr. Bank Account Rs. 148200
  Dr. Calls in Advance Rs. 1800
  Cr. First Call Account Rs. 150000

8. Second and Final Call Money Received:

• Second and final call amount per share: Rs.10 - Rs.2 -Rs.2 - Rs.3 = Rs.3
• Total amount due: Rs.3 * 50,000 shares = Rs. 150,000
• Journal Entry:
  Dr. Bank Account Rs. 150,000
  Cr. Second and Final Call Account Rs. 150,000