Samuel Limited issued a prospectus inviting applications for 1,20,000 equity shares of 10 each at a premium of 2 per share payable as follows: On…

CA Foundation · Accounting · MTP · January 2025
Samuel Limited issued a prospectus inviting applications for 1,20,000 equity shares of 10 each at a premium of 2 per share payable as follows: On Application -3 per share On Allotment -5 per share (including premium) On First and Final Call -4 per share Applications were received for 3,60,000 equity shares. Applications for 80,000 shares were rejected and the money refunded. Shares allotted to remaining applications as follows: Category No. of shares Applied No. of shares Allotted I 1,60,000 80,000 II 1,20,000 40,000 Excess money received with applications was adjusted towards sums due on allotment and the balance amount returned to the applicants. All calls were made duly received except the final call by a shareholder belonging to Category I who has applied for 680 shares. His shares were forfeited. The forfeited shares were reissued at 13 per share fully paid -up. Pass necessary journal entries for the above transactions in the books of Samuel Ltd. Open call in arrears account whenever required.

Suggested Answer and Working Notes:

In the books of Samuel Limited Journal Entries Particulars Dr. (₹) Cr. (₹) Bank A/c (Note 1 – Column - 3) Dr. 10,80,000 To Equity Share Application A/c 10,80,000 (Being application money received on 3,60,000 shares @3 per share) Equity Share Application A/c Dr. 10,80,000 To Equity Share Capital A/c 3,60,000 To Equity Share Allotment A/c (Note 1 Column - 5) 4,40,000 To Bank A/c (Note 1 – Column - 6) 2,80,000 (Being application money on 1,20,000 shares transferred to Equity Share Capital Account; out of the excess application money received,4,40,000 is adjusted towards allotment and - 2,80,000 refunded as per Board’s Resolution No…..dated…) Equity Share Allotment A/c Dr. 6,00,000 To Equity Share Capital A/c 3,60,000 To Securities Premium a/c 2,40,000 (Being allotment money due on 1,20,000 shares @5 each including premium at 4 each as per Board’s Resolution No….dated….) Bank A/c (Note 1 – Column - 8) Dr. 1,60,000 To Equity Share Allotment A/c 1,60,000 (Being balance allotment money received) Equity Share First and Final Call A/c Dr. 4,80,000 To Equity Share Capital A/c 4,80,000 (Being final call money due on 1,20,000 shares @4 per share as per Board’s Resolution No…..dated….) Bank A/c Dr. 4,78,640 Calls in Arrears A/c Dr. 1,360 To Equity Share First and Final Call A/c 4,80,000 (Being final call money on 1,19,660 shares @4 each received) Equity Share Capital A/c Dr. 3,400 To Calls in Arrears A/c 1,360 To Forfeited Shares A/c 2,040 Being forfeiture of340equity shares for non- payment of call money as per Board’s Resolution No…..dated ….) Bank A/c Dr. 4,420 To Equity Shares Capital A/c 3,400 To Securities Premium A/c 1,020 Being re-issue of340 shares @13 each as per Board’s Resolution No…..dated….) Forfeited Shares A/c Dr. 2,040 To Capital Reserve A/c 2,040 (Being profit on re-issue transferred to Capital Reserve) Working Note: Calculation for Adjustment and Refund Category No. of Shares Applied for (1) No. of Shares Allotted (2) Amount Received on Application (3) Amount Required on Application (4) Amount adjusted on Allotment (5) Refund [₹ 3 -4 +5] (6) Amount due on Allotment (7) Amount received on Allotment (8) Rejected 80,000 Nil 2,40,000 Nil Nil 2,40,000 Nil Nil (i) 1,60,000 80,000 4,80,000 2,40,000 2,40,000 Nil 4,00,000 1,60,000 (ii) 1,20,000 40,000 3,60,000 1,20,000 2,00,000 40,000 2,00,000 Nil TOTAL 3,60,000 1,20,000 10,80,000 3,60,000 4,40,000 2,80,000 6,00,000 1,60,000 Also, (i) Amount Received on Application (3) = No. of shares applied for (1) x 3 (ii) Amount Required on Application (4) = No. of shares allotted (2) x 3

Topics: Issue, Forfeiture and Re-issue of Shares

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