David Limited issued a prospectus inviting applications for 3,60,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable as follows: On…

In the books of David Limited Journal Entries Particulars Dr. (₹) Cr. (₹) Bank A/c (Note 1 – Column 3) Dr. 32,40,000 To Equity Share Application A/c 32,40,000 (Being application money received on 10,80,000 shares @ ₹ 3 per share) Equity Share Application A/c Dr. 32,40,000 To Equity Share Capital A/c 10,80,000 To Equity Share Allotment A/c (Note 1 Column 5) 13,20,000 To Bank A/c (Note 1 – Column 6) 8,40,000 (Being application money on 3,60,000 shares transferred to Equity Share Capital Account; out of the excess application money received, ₹ 13,20,000 is adjusted towards allotment and 8,40,000 refunded as per Board's Resolution No.....dated...) Equity Share Allotment A/c Dr. 18,00,000 To Equity Share Capital A/c 10,80,000 To Securities Premium a/c 7,20,000 (Being allotment money due on 3,60,000 shares @ ₹ 5 each including premium at ₹ 2 each as per Board's Resolution No...dated...) Bank A/c (Note 1 – Column 8) Dr. 4,80,000 To Equity Share Allotment A/c 4,80,000 (Being balance allotment money received) Equity Share First and Final Call A/c Dr. 14,40,000 To Equity Share Capital A/c 14,40,000 (Being final call money due on 3,60,000 shares @ ₹ 4 per share as per Board's Resolution No... dated...) Bank A/c Dr. 14,35,920 Calls in Arrears A/c Dr. 4,080 To Equity Share First and Final Call A/c 14,40,000 (Being final call money on 3,58,980 shares @ ₹ 4 each received) Equity Share Capital A/c Dr. 10,200 To Calls in Arrears A/c 4,080 To Forfeited Shares A/c 6,120 (Being forfeiture of 1,020 equity shares (WN-2) for non- payment of call money as per Board's Resolution No.....dated ....) Bank A/c Dr. 13,260 To Equity Shares Capital A/c 10,200 To Securities Premium A/c 3,060 (Being re-issue of 1,020 shares @ ₹ 13 each as per Board's Resolution No.....dated....) Forfeited Shares A/c Dr. 6,120 To Capital Reserve A/c 6,120 (Being profit on re-issue transferred to Capital Reserve) Working Note: 1. Calculation for Adjustment and Refund Category No. of Shares Applied (1) No. of Shares Allotted (2) Amount Received on Application (3) Amount Required on Application (4) Amount adjusted [3-4+5] Allotment Refund (6) Amount due on Allotment (7) Amount received on Allotment (8) Rejected 2,40,000 Nil 7,20,000 Nil Nil 7,20,000 Nil Nil I 4,80,000 2,40,000 14,40,000 7,20,000 7,20,000 Nil 12,00,000 4,80,000 II 3,60,000 1,20,000 10,80,000 3,60,000 6,00,000 1,20,000 6,00,000 Nil TOTAL 10,80,000 3,60,000 32,40,000 10,80,000 13,20,000 8,40,000 18,00,000 4,80,000 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 2. Calculation of Forfeited Shares Number of Shares Applied for = 2,040 shares Number of Shares Allotted under Category I = 2,040 x (2,40,000 / 4,80,000) = 1,020 shares