Page 23 - DEBK12

Chapter 8 . Company Accounts—Accounting for Share Capital 8.13
Working Notes:
1. 40,000 shares were allotted to the applicants for 60,000 shares
Number of shares applied by Ashok = 60,000/40,000 × 3,000 = 4,500 Shares
Therefore, application money paid by Ashok = 4,500 × ` 2 = ` 9,000.
2. Amount due but not paid by Ashok on allotment: `
Amount paid on application (WN 1) 9,000
Less: Amount adjusted on application (3,000 × ` 2) 6,000
Excess application money 3,000
Amount due on allotment (3000 × ` 5) 15,000
Less: Excess application money adjusted 3,000
Amount due but not paid by Ashok 12,000
3. Amount received on allotment:
Total amount due on allotment 2,00,000
Less: Excess application money adjusted 40,000
1,60,000
Less: Amount due but not paid by Ashok (WN 2) 12,000
Amount Received on Allotment 1,48,000

4. Number of shares allotted to Baneet = 40,000/60,000 × 3,000 = 2,000 shares.
Illustration 7. (Business Purchase and Issue of Shares).
Complete the following Journal entries:

Date Particulars L.F. Dr. (`) Cr. (`)
Plant A/c ...Dr. 3,50,000
Land and Building A/c ...Dr. 6,00,000
Stock in Trade A/c ...Dr. 4,50,000
Goodwill A/c ...Dr. 2,00,000
To Sundry Creditors A/c 1,00,000
To Parag Gupta ?
(?)
? ...Dr. ?
To ? ?
To ? ?
(? Equity Shares of ` 10 each issued at a premium of 50%)
Solution:
Date Particulars L.F. Dr. (`) Cr. (`)
Plant A/c ...Dr. 3,50,000
Land and Building A/c ...Dr. 6,00,000
Stock in Trade A/c ...Dr. 4,50,000
Goodwill A/c ...Dr. 2,00,000
To Sundry Creditors A/c 1,00,000
To Parag Gupta (Balancing Figure) 15,00,000
(Business purchased for ` 15,00,000)
Parag Gupta ...Dr. 15,00,000
To Equity Share Capital A/c 10,00,000
To Securities Premium Reserve A/c 5,00,000
(1,00,000 Equity Shares of ` 10 each issued at a premium of 50%) (Note)
Purchase Price ` 15,00,000
Note: Number of Equity Shares to be issued = = = 1,00,000 shares.
Issue Price ` 15