Happy Limited registered with an authorised equity capital of 4,00,000 divided into 4,000 shares of 100 each, issued for subscription of 2,000…

CA Foundation · Accounting · RTP · September 2024
Happy Limited registered with an authorised equity capital of 4,00,000 divided into 4,000 shares of 100 each, issued for subscription of 2,000 shares payable at 25 per share on application, 30 per share on allotment, 20 per share on first call and the balance as and when required. Application money on 2,000 shares was duly received and allotment was made to them. The allotment amount was received in full, but when the first call was made, one shareholder failed to pay the amount on 200 shares held by him and another shareholder with 100 shares, paid the entire amount on his shares. The company did not make any other call. Give the necessary journal entries in the books of the company to record these transactions.

Suggested Answer and Working Notes:

Journal entries in the books of Happy Limited Dr. Cr. Bank A/c Dr. 50,000 To Equity Share Application A/c 50,000 (Money received on application for2,000 shares @25 per share) Equity Share Application A/c Dr. 50,000 To Equity Share Capital A/c 50,000 (Transfer of application money on 2,000 shares to share capital) Equity Share Allotment A/c Dr. 60,000 To Equity Share Capital A/c 60,000 (Amount due on the allotment of2,000 shares @30 per share) Bank A/c Dr. 60,000 To Equity Share Allotment A/c 60,000 (Allotment money received) Equity Share First Call A/c Dr. 40,000 To Equity Share Capital A/c 40,000 (First call money due on 2,000 shares @20 per share) Bank A/c Dr. 38,500 Calls-in-Arrears A/c Dr. 4,000 To Equity Share First Call A/c 40,000 To Calls-in-Advance A/c 2,500 (First call money received on 1,800 shares and calls-in-advance on 100 shares @25 per share)

Topics: Issue, Forfeiture and Re-issue of Shares

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