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8.12 Double Entry Book Keeping—CBSE XII
Illustration 6.
Prakash Engineering Company issued for public subscription 40,000 Equity Shares of ` 10 each
at a premium of ` 2 per share, payable as:
On application ` 2 per share;
On allotment ` 5 per share (including premium);
On first call ` 2 per share;
On final call ` 3 per share.
Applications were received for 75,000 Equity Shares. The shares were allotted on pro rata basis
to the applicants of 60,000 shares only, remaining applications being rejected. Money overpaid
on application was utilised towards the sum due on allotment.
Ashok to whom 3,000 shares were allotted failed to pay the allotment money and the two calls.
Baneet who applied for 3,000 shares paid the calls money along with allotment money. Pass
Journal entries to record the above transactions. (Delhi and AI 2008 C)

Solution: In the Books of Prakash Engineering Company
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 1,50,000
To Equity Shares Application A/c 1,50,000
(Application money received on 75,000 Equity Shares @ ` 2 per share)
Equity Shares Application A/c ...Dr. 1,50,000
To Equity Share Capital A/c (40,000 × ` 2) 80,000
To Equity Shares Allotment A/c (20,000 × ` 2) 40,000
To Bank A/c (15,000 × ` 2) 30,000
(Application money adjusted)
Equity Shares Allotment A/c ...Dr. 2,00,000
To Equity Share Capital A/c 1,20,000
To Securities Premium Reserve A/c 80,000
(Allotment money due on 40,000 shares)
Bank A/c ...Dr. 1,58,000
To Equity Shares Allotment A/c (WN 1, 2 and 3) 1,48,000
To Calls-in-Advance A/c (2,000 × ` 5) (WN 4) 10,000
(Allotment money received except for 3,000 shares allotted to Ashok
and calls-in-advance is received on 2,000 shares of Baneet)
Equity Shares First Call A/c ...Dr. 80,000
To Equity Share Capital A/c 80,000
(First call money due on 40,000 shares)
Bank A/c ...Dr. 70,000
Calls-in-Advance A/c ...Dr. 4,000
To Equity Shares First Call A/c 74,000
(First call money received except on 3,000 shares
[` 80,000 – ` 6,000 – ` 4,000 (Calls-in-Advance)])
Equity Shares Second and Final Call A/c ...Dr. 1,20,000
To Equity Share Capital A/c 1,20,000
(Second and final call money due on 40,000 shares)
Bank A/c ...Dr. 1,05,000
Calls-in-Advance A/c ...Dr. 6,000
To Equity Shares Second and Final Call A/c 1,11,000
(Second and final call money received except on 3,000 shares
held by Ashok)