Ambiance Limited invited applications for issuing - 2,25 ,000 equity shares of 10 each at a premium of 5 per share. The total amount was payable as…
CA Foundation · Accounting · RTP · May 2025
Ambiance Limited invited applications for issuing - 2,25 ,000 equity shares of 10 each at a premium of 5 per share. The total amount was payable as follows: -9 per share (including premium) on application and allotment - Balance on the First and Final Call Applications for 9 ,00,000 equity shares were received. Applications for 6,00,000 equity shares were rejected and money refunded. Shares were allotted on pro -rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 4,500 shares applied by Mr. Kabir. His shares were forfeited. The forfeited shares were re-issued at a discount of 4/- per share. Pass necessary journal entries· for the above transactions in the books of Ambiance Limited.
Suggested Answer and Working Notes:
Journal Entries in the books of Ambiance Ltd. Particulars Dr. ₹ Cr. ₹ 1 Bank Account Dr. 81,00,000 To Share Application & Allotment A/c 81,00,000 (Being Application money on 9,00,000 shares at 9 per share received.) 2 Share Application & Allotment A/c Dr. 81,00,000 To Share Capital A/c (₹ 225,000 x 4) 9,00,000 To Securities premium A/c (₹ 225,000 x 5) 11,25,000 To Bank A/c (₹ 6,00,000 x 9) 54,00,000 To Share First & Final Call A/c 6,75,000 (Being application money transferred) 3 Share First & Final Call A/c (₹ 225,000 x 6) Dr. 13,50,000 To Share Capital Account 13,50,000 (Amount First & Final Call A/c due from members as per Directors, resolution no...... dated.....) 4 Bank Account A/c Dr. 6,64,875 Calls in arrear A/c Dr. 10,125 To Share First & Final Call Account 6,75,000 (Being Receipt of the amounts due on first call) 5 Equity share capital A/c Dr. 33,750 To Share forfeiture A/c 23,625 To Calls in arrear A/c 10,125 (Being - 3,375 shares forfeited for non payment of final call.) 6 Bank Account A/c (₹ 3,375 x 6) Dr. 20,250 Share forfeiture A/c (₹ 3,375 x 4) 13,500 To Share Capital Account (₹ 3,375 x 10) 33,750 (Being forfeited shares reissued at 4 discount) 7 Share forfeiture A/c 10,125 To Capital reserve A/c 10,125 (Being share forfeiture transferred to capital reserve*) Working notes: 1. Shares Applied Shares Allotted Money Received on Application @9/- Money Transferred to Share Capital@4/- Money Transferred to Security Premium @5/- Excess Application Money Share First and Final Call @6/- Amount received from Share First and Final Call after adjusting excess appl. money Money Refunded 6,00,000 225,000 54,00,000 9,00,000 11,25,000 6,75,000 13,50,000 12,75,000 54,00,000 3,00,000 - 27,00,000 - - - - - 27,00,000 9,00,000 2,25,000 81,00,000 9,00,000 11,25,000 6,75,000 13,50,000 13,39,875 * 54,00,000 * 13,50,000 less - 10,125. 2. Number of shares allotted to Mr. Kabir = 4,500 x 225,000 /3,00,000 = 3,375 shares 3. Calculation of calls in arrear Application money received from Kabir (₹ 4,500 x 9) 40,500 Less: actual application money - 3,375 x 9 30,375 Excess Application & Allotment Money Adjusted with first and final call 70,875 Final call due from Kabir 20,250 Less: Adjusted with final call (10, 125) Calls in arrear 10,125
Topics: Issue, Forfeiture and Re-issue of Shares
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