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Question -

Ajanta Company Limited having a normal capital of ₹ 3,00,000, divided into shares of ₹ 10 each offered for public subscription of 20,000 shares payable at ₹ 2 on application; ₹ 3 on allotment and the balance in two calls of ₹ 2.50 each. Applications were received by the company for 24,000 shares. Applications for 20,000 shares were accepted in full and the shares allotted. Applications for the remaining shares were rejected and the application money was refunded.
All moneys due were received with the exception of the final call on 600 shares which were forfeited after legal formalities were fulfilled. 400 shares of the forfeited shares were reissued at ₹ 9 per share.
Record necessary journal entries and prepare the balance Sheet showing the amount transferred to capital reserve and the balance in Share forfeiture account.



Answer -

Books of Ajanta Company Limited

Date

Particulars

L.F.

Debit

Amount

₹

Credit

Amount

₹

Bank A/c

Dr.

48,000

To Share Application A/c

48,000

(Share Application money received for  24,000 shares @ ₹ 2 per share)

Share Application A/c

Dr.

48,000

To Share Capital A/c

40,000

To Bank A/c

8,000

(Share Application @ ₹ 2 per share for 20,000 shares  transferred to Share Capital and remaining for 4,000 shares rejected)

Share Allotment A/c

Dr.

60,000

To Share Capital A/c

60,000

(Share Allotment money due @ ₹ 3 per share on 20,000 shares )

Bank A/c

Dr.

60,000

To Share Allotment A/c

60,000

(Share Allotment money received for 20,000 shares  @ ₹ 3

per share)

Share First Call A/c

Dr.

50,000

To  Share Capital A/c

50,000

(Share First Call money due on 20,000 Shares @ ₹ 2.5 per share)

Bank A/c

Dr.

50,000

To Share First Call A/c

50,000

(Share First Call money received for 20,000 shares @ ₹ 2.5 per share)

Share Final Call A/c

Dr.

To Share Capital A/c

(Share Final Call money due on 20,000 Shares @ ₹ 2.5 per share)

Bank A/c

Dr.

48,500

Calls in Arrears A/c

Dr.

1,500

To Share Final Call A/c

50,000

(Share Final Call money received for 19,400 shares @ ₹ 2.5 per share except 600 shares)

Share Capital A/c

Dr.

6,000

To Calls in Arrears A/c

1,500

To Share Forfeiture A/c

4,500

(600 Shares forfeited @ ₹ 10 each for the non-payment of Share

Final Call @  ₹ 2.5 per share)

Bank A/c

Dr.

3,600

Share Forfeiture A/c

Dr.

400

To Share Capital A/c

4,000

(400 shares @ ₹ 10 each for ₹ 9 per share reissued)

Share Forfeiture Account

Dr.

2,600

To Capital Reserve A/c

2,600

(After reissue balance of 400 shares in Forfeiture Account transferred to Capital Reserve Account)

Ajanta Company Limited

Balance Sheet

Particulars

Note No.

Amount

(₹)

I. Equity and Liabilities

1. Shareholders’ Funds

a. Share Capital

1

1,99,500

    b. Reserves and Surplus

2

2,600

2. Non-Current Liabilities

3. Current Liabilities

Total

2,02,100

II. Assets

1.Non-Current Assets

2.Current Assets

a. Cash and Cash Equivalents

3

2,02,100

Total

2,02,100

NOTESTO ACCOUNTS

Note No.

Particulars

Amount

(₹)

1

Share Capital

Authorised Share Capital

30,000 shares of ₹ 10 each

3,00,000

Issued Share Capital

20,000 shares of ₹ 10 each

2,00,000

Subscribed, Called-up and Paid-up Share Capital

19,800 shares of ₹ 10 each

1,98,000

Add: Shares Forfeiture

1,500

1,99,500

2

Reserves and Surplus

Capital Reserve

2,600

3

Cash and Cash Equivalents

Cash at Bank

2,02,100

WorkingNote:

Share Forfeiture Account credited

₹ 7.5 per share

Less: Share Forfeiture Account debited

₹1 per share

Amount  transferred to Capital Reserve Account, after adjustment

₹ 6.5 per share

Amount of 400 sharestransferred to Capital Reserve Account, after reissue = 400 Shares @ ₹ 6.5 pershare = ₹ 2,600

 

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