R Ltd. invited applications for issuing - 1,00,000 equity shares of 10 each at a premium of 2 per share. The amounts were payable as follows: On…

Journal entries in the books of R Ltd. Particulars Dr. (₹) Cr. (₹) 1 Bank A/c Dr. 15,00,000 To Share Application & Allotment A/c (₹ 2,50,000 X 6) 15,00,000 (Application money on 2,50,000 shares at 6 per share received.) 2 Share Application & Allotment A/c Dr. 15,00,000 To Share Capital A/c (WN - 1) (₹ 1,00,000 X 4) 4,00,000 To Securities premium A/c (WN - 1) (₹ 1,00,000 X 2) 2,00,000 To Bank A/c (WN - 1) (₹ 1,00,000 X 6) 6,00,000 To Share First & Final Call A/c (WN - 1) 3,00,000 (Application money transferred) 3 Share First & Final Call A/c (₹ 1,00,000 X 6) Dr. 6,00,000 To Share Capital A/c 6,00,000 (Amount First & Final Call A/c due from members as per Directors, resolution no...... dated.....) 4 Bank A/c (₹ 3,00,000 -6,000) Dr. 2,94,000 Calls in arrear A/c (WN - 3) Dr. 6,000 To Share First & Final Call A/c 3,00,000 (Receipt of the amounts due on first call) 5 Share capital A/c Dr. 20,000 To Share forfeiture A/c 14,000 To Calls in arrear A/c 6,000 (₹ 2,000 shares forfeited for non-payment of final call) 6 Bank A/c Dr. 16,000 Share forfeiture A/c Dr. 4,000 To Share Capital Account 20,000 (Forfeited shares reissued at 2 discount) 7 Share forfeiture A/c Dr. 10,000 To Capital reserve A/c 10,000 (Share forfeiture transferred to capital reserve*) Working notes: 1. Shares Applied, Shares Allotted, Money Received on Application @6/-, Application Money Transferred to Share Capital@4/-, Application Money Transferred to Security Premium @2/-, Excess Application Money, Share First and Final Call @6/-, Amount received from Share First and Final Call after adjusting excess appl. money, Money Refunded Shares Applied Shares Allotted Money Received on Application @6/- Application Money Transferred to Share Capital@4/- Application Money Transferred to Security Premium @2/- Excess Application Money Share First and Final Call @6/- Amount received from Share First and Final Call after adjusting excess appl. money Money Refunded 1,00,000 - 6,00,000 - - 6,00,000 - - 6,00,000 1,50,000 1,00,000 9,00,000 4,00,000 2,00,000 3,00,000 6,00,000 3,00,000* - 2,50,000 1,00,000 15,00,000 4,00,000 2,00,000 3,00,000 6,00,000 2,94,000** 6,00,000 * 6,00,000 less - 3,00,000 ** 3,00,000 less - 6,000. 2. Number of shares allotted to Ms. Jane = 3,000 x 1,00,000 /1,50,000 = 2,000 shares 3. Calculation of calls in arrear Final call due from Ms. Jane 12,000 Less: Adjusted with final call (6, 000) Calls in arrear 6,000 Calculation of amount Transferred to Capital Reserve Amount Forfeited on 2,000 shares 14,000 Less: Discount given on Re-issue (4, 000) Amount Transferred to Capital Reserve 10,000 Alternatively, assuming the excess application money retained by the company can also be treated as “calls in advance’. In such case, journal entry no2will be Particulars Dr. (₹) Cr. (₹) Share Application & Allotment A/c Dr. 15,00,000 To Share Capital A/c (WN - 1) (₹ 1,00,000 X 4) 4,00,000 To Securities premium A/c (WN - 1) (₹ 1,00,000 X 2) 2,00,000 To Bank A/c (WN - 1) (₹ 1,00,000 X 6) 6,00,000 To Calls in advance A/c (WN - 1) 3,00,000 (Application money transferred) Further, journal entry, no4shall be : Particulars Dr. (₹) Cr. (₹) Bank Account (₹ 3,00,000 -6,000) Dr 2,94,000 Calls in Arrears (2000 shares X 3) Dr 6,000 Calls in Advance Dr 3,00,000 To Share first and final call 6,00,000