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Question -

Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under :

With Application

Rs 3 per share

On allotment (including premium)

Rs 5 per share

On First call

Rs 2 per share

On Second and Final call

Rs 2 per share
Applications were received for 1,60,000 shares. Allotment was made on pro-rata basis. Excess money on application was adjusted against the amount due on allotment.
Rohan, whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs 7 per share.
Record journal entries in the books of the company to record these transactions relating to share capital. Also show the company’s balance sheet.



Answer -

Books of Himalaya Company Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bank A/c

Dr.

 

4,80,000

 

 

To Share Application A/c

 

 

4,80,000

 

(Share Application money received for 1,60,000 shares @ Rs 3 per share)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

4,80,000

 

 

To Equity Share Capital A/c

 

 

3,60,000

 

To Share Allotment A/c

 

 

1,20,000

 

(Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

6,00,000

 

 

To Equity Share Capital A/c

 

 

3,60,000

 

To Securities Premium

 

 

2,40,000

 

(Share Allotment due on 1,20,000 shares @ Rs 5 per share including Rs 2 Securities Premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,80,000

 

 

To Share Allotment A/c

 

 

4,80,000

 

(Share allotment for 1,20,000 shares @ Rs 5 per share received)

 

 

 

 

 

 

 

 

 

Share First Call A/c

Dr.

 

2,40,000

 

 

To Equity Share Capital A/c

 

 

2,40,000

 

(Share First Call due on 1,20,000 shares @ Rs 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,30,400

 

 

To Share First Call A/c

 

 

2,30,400

 

(Share First Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)

 

 

 

 

 

 

 

 

 

Share Final Call A/c

Dr.

 

2,40,000

 

 

To Equity Share Capital A/c

 

 

2,40,000

 

(Share Final call due on 1,20,000 shares @ Rs 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,30,400

 

 

To Share Final Call A/c

 

 

2,30,400

 

(Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)

 

 

 

 

 

 

 

 

 

Equity Share Capital A/c (4,800×10)

Dr.

 

48,000

 

 

To  Share First Call A/c (4,800×2)

 

 

 

9,600

 

To  Share Final Call A/c (4,800×2)

 

 

 

9,600

 

To  Share Forfeiture A/c (4,800×6)

 

 

 

28,800

 

(4,800 shares forfeited for the non-payment of First Call and Final Call)

 

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

33,600

 

 

Share Forfeiture A/c

Dr.

 

14,400

 

 

To  Equity Share Capital

 

 

 

48,000

 

(4,800 shares reissued @ Rs 7 per share, fully paid-up)

 

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

14,400

 

 

To Capital Reserve A/c

 

 

 

14,400

 

(Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)

 

 

 

 

 

 

 

 

 

 

 

Himalaya Company Limited

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

12,00,000

b. Reserves and Surplus

2

2,54,400

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

14,54,400

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

14,54,400

Total

 

14,54,400

 

 

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Share Capital

 

 

Authorised Share Capital

 

 

…….. shares of Rs 10 each

-

 

Issued Share Capital

 

 

1,20,000 shares of Rs 10 each

12,00,000

 

Subscribed, Called-up and Paid-up Share Capital

 

 

1,20,000 shares of Rs 10 each

12,00,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

2,40,000

 

 

Capital Reserve

14,400

2,54,400

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

14,54,400

 

 

 

 

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