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S. Company Ltd issued 50,000 shares of Rs 100 each payable as:
Rs 30 on application; Rs 40 on allotment and balance on first and final call
Applications were received for 80,000 shares. Board of directors decided to allot as under:
Share applied Share applied Remaining on |
15,000 5,000 pro-rata basic |
full reject
|
Money over paid on pro-rata allotment was utilized in allotment and other calls. All money was duly received expect Mr. X, who was holding 7,000 shares under pro-rata basis and Mr. Y, who was holding 2,000 shares under full allotment did not pay allotment and call money
Required: journal entries
[Answer: Calls in arrears on allotment = Rs 210,000: Arrears on F&F call = Rs 270,000]
SOLUTION:
Given and working note:
Shares Issued |
Issued Price |
Installation |
Arrears and Advance |
|
Share Applied |
Shares Allotted |
|
50,000 |
100 |
Application Allotment F&F calls |
30 40 30 |
. −7,000; −2,000 −7,000; −2,000 |
|
15,000 5,000 60,000 |
15,000 Nil 35,000A |
|
80,000 |
50,000 |
|||||
Return or refunded money
= 5,000 share (Nil) x Rs 30 application money
= Rs 150,000#
Excess money
= Difference in pro–rata shares x Application money
= (60,000 – 35,000) x Rs 30
= 25,000 shares x Rs 30
= 750,000*
When there is a call in arrears on allotment, this formula can be applied:
Amount need on allotment (50,000 shares @ Rs 40) Less: Excess amount of pro-rata |
|
20,00,000 (750,000*) |
Arrears seem on allotment (7,000 Shears @ Rs 40) Less: Paid = 750,000* x 7,000 ÷ 35,000A |
280,000 (150,000) |
12,50,000
(130,000) |
Received amount on allotment (bank) Arrears on 2,000 shares of 100% allotment (2,000 x Rs 40) |
11,20,000 (80,000) |
|
Bank allotment |
10,40,000 |
Where: Paid = (Excess amount x Arrears shares) ÷ Pro-rata allotted shares
Total arrears on allotment (130,000 + 80,000) = 210,000B
Total arrears on F&F call (7,000 + 2,000) x Rs 30 = 270,000C
Journal entries
In the book of Samsung Corporation Ltd
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
Received |
Amount received on application |
|
|
|
|
|
Bank account To Equity share application account (Being- amount received on 80,000 shares @ Rs 30) |
Dr
|
|
24,00,000
|
24,00,000
|
Transfer |
Amount transfer of application |
|
|
|
|
|
Equity share application account To Equity share capital account To Bank account (return) To Equity shares allotment account (excess) (Being- amount transfer of application to capital, Excess amount returned and adjusted) |
Dr
|
|
24,00,000
|
15,00,000 1,50,000# 7,50,000*
|
Due |
Amount due/receivable on allotment |
|
|
|
|
|
Equity share allotment account To Equity share capital account (Being- amount due/receivable on allotment) |
Dr
|
|
20,00,000
|
20,00,000
|
Received |
Amount received on allotment |
|
|
|
|
|
Bank account Calls in arrear account To Equity share allotment account (Being- amount received on 41,000 shares from working note after adjusting excess and arrears) |
Dr Dr
|
|
10,40,000 2,10,000B
|
12,50,000
|
Due |
Amount due/receivable on first and final call |
|
|
|
|
|
Equity share first and final call account To Equity share capital account (Being- amount due/receivable on calls) |
Dr
|
|
15,00,000
|
15,00,000
|
Received |
Amount received on first and final call |
|
|
|
|
|
Bank account Calls in arrears account To Equity share first and final call account (Being- amount received on 41,000 shares @ Rs 30 Each and arrears adjusted) |
Dr Dr |
|
12,30,000 2,70,000C |
15,00,000 |
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