Question

Khushboo Ltd. issued for Public subscription 50,000 equity shares of Rs. 10 each at a premium of 30% payable as under :
Rs. 4 on application
Rs. 5 on allotment (including premium)
Rs. 4 on first & final call
Applications were received for 1,00,000 shares. Allotment was made pro-rata to the applicants for 80,000 shares, the remaining applications being refused. Money overpaid on applications was utilised towards sums due on allotment. Chatterjee, to whom 1,000 shares were allotted, failed to pay the allotment and call money and the shares subsequently forfeited. Half of the forfeited shares were reissued as fully paid at a discount of 10%. Show the journal entries to record the above transactions.

Answer 1

Amount received on allotment Rs. 1,27,400, Capital Reserve Rs. 2,500.
Hints : (i) Out of excess application money of Rs. 2,400, the amount of Rs. 2,000 is a part of share capital and balance of Rs. 400 is a part of securities premium.
(ii) Entry for forfeiture of shares :
`{:("Equity Share Capital A/c","Dr. 10,000"),("Securities Premium Reserve A/c (3,000-400)","Dr. 2,600"),(" To Equity Share Allotment A/c"," 2,600"),(" To Equity Share First & Final Call A/c"," 4,000"),(" To Share Forfeiture A/c"," 6,000"):}`