Devis Ltd. invited applications for issuing 3,00,000 equity shares of 20 each. The amounts were payable as follows: On application -6 per share On…

CA Foundation · Accounting · MTP · June 2024
Devis Ltd. invited applications for issuing 3,00,000 equity shares of 20 each. The amounts were payable as follows: On application -6 per share On allotment -10 per share On first and final call -4 per share Applications were received for 4,50,000 shares and pro-rata allotment was made to all the applicants. Money overpaid on application was adjusted towards allotment money. X, who was allotted 9,000 shares, failed to pay the first and final call money. His shares were forfeited. Out of the forfeited shares, 7,500 shares were reissued as fully paid-up @16 per share. Pass necessary Journal entries to record the above transactions in the books of Devis Ltd.

Suggested Answer and Working Notes:

In the books of Devis Ltd. Journal Entries Particulars Dr. (₹) Cr. (₹) Bank A/c Dr. 27,00,000 To Equity Share Application A/c 27,00,000 (Being the application money received for 4,50,000 shares at 6 per share) Equity Share Application A/c Dr. 27,00,000 To Equity Share Capital A/c 18,00,000 To Share allotment A/c 9,00,000 (Being share allotment made for 3,00,000 shares and excess adjusted towards allotment) Equity Share Allotment A/c Dr. 30,00,000 To Equity Share Capital A/c 30,00,000 (Being allotment amount due on 3,00,000 equity shares at 10 per share as per Directors’ resolution no... dated...) Bank A/c Dr. 21,00,000 To Equity Share Allotment A/c 21,00,000 (Being balance allotment money received for 3,00,000 shares) Equity Share first and final call A/c Dr. 12,00,000 To Equity Share Capital A/c 12,00,000 (Being first and final call amount due on 3,00,000 equity shares at 4 per share as per Directors’ resolution no... dated...) Bank A/c Dr. 11,64,000 Calls in arrears A/c Dr. 36,000 To Equity Share first and final call A/c 12,00,000 (Being final call received on 2,91,000 shares) Share capital A/c ( 9,000 x 20) Dr. 1,80,000 To Forfeited shares A/c ( 9,000 x 16) 1,44,000 To Calls in arrears A/c ( 9,000 x 4) 36,000 (Being forfeiture of 9,000 shares of 20each fully called -up for non payment of first and final call @4 as per Directors’ resolution no... dated..) Bank A/c ( 7,500 x 16) Dr. 1,20,000 Forfeited shares A/c (7,500 x 4) Dr. 30,000 To Equity Share Capital A/c (7,500 x 20) 1,50,000 (Being re- issue of 7,500 shares @16) Forfeited share A/c ( 7,500 x 12) Dr. 90,000 To Capital reserve A/c ( 7,500 x 12) 90,000 (Being profit on re -issue transferred to capital reserve) Working Note: Calculation of amount to be transferred to Capital reserve A/c Particulars ₹ Forfeited amount per share = 1,44,000/ 9,000 = 16 Loss on re issue ( 20-16) 4 Surplus per share 12 Transfer to capital reserve 12x 7,500 90,000

Topics: Issue, Forfeiture and Re-issue of Shares

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