Page 28 - DEBK12

8.18 Double Entry Book Keeping—CBSE XII
Illustration 12.

AB Ltd. invited applications for issuing 75,000 Equity Shares of ` 100 each at a premium of
` 30 per share. The amount was payable as follows:
On Application and Allotment—` 85 per share (including premium),
On First and Final Call—the balance Account.

Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected
and shares were allotted on pro rata basis to the remaining applicants. Excess money received
on application and alloment was adjusted towards sums due on first and final call. The
call was made. A shareholder, who applied for 1,000 shares, failed to pay the first and final
call money. His shares were forfeited. All the forfeited shares were reissued at ` 150 per share
as fully paid-up.
Pass necessary Journal entries for the above transactions in the books of AB Ltd. (Delhi 2014)

Solution: In the Books of AB Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c (1,27,500 × ` 85) ...Dr. 1,08,37,500
To Equity Shares Application and Allotment A/c 1,08,37,500
(Application and allotment money received for 1,27,500
shares @ ` 85 per share)

Equity Shares Application and Allotment A/c ...Dr. 1,08,37,500
To Equity Share Capital A/c (75,000 × ` 55) 41,25,000
To Securities Premium Reserve A/c (75,000 × ` 30) 22,50,000
To Calls-in-Advance A/c 21,25,000
To Bank A/c (27,500 × ` 85) 23,37,500
(Shares allotted; applications for 27,500 shares rejected and the balance
applicants issued shares on pro rata)
Equity Shares First and Final Call A/c (75,000 × ` 45) ...Dr. 33,75,000
To Equity Share Capital A/c 33,75,000
(First and final call due on 75,000 shares @ ` 45 per share)
Bank A/c (WN 2) ...Dr. 12,37,500
Calls-in-Advance A/c ...Dr. 21,25,000
To Equity Shares First and Final Call A/c 33,62,500
(Amount due on shares first and final call received except on 750
shares and Calls-in-Advance adjusted)
Equity Share Capital A/c (750 × ` 100) ...Dr. 75,000
To Equity Shares First and Final Call A/c 12,500
To Forfeited Shares A/c 62,500
(750 shares forfeited for non-payment of first and final call)