Prince Limited Issued A Prospectus Inviting Applications For 20,000 Equity Shares Of Rs 10 Each At A Premium Of Rs 3 Per Share Payable

Prince Limited issued a prospectus inviting applications for 20,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share payable as follows:

With Application	Rs.2 per share
On allotment (including premium)	Rs.5 per share
On First call	Rs.3 per share
On Second and Final Call	Rs.3 per share

Applications were received for 30,000 shares and allotment was made on pro-rata basis. Money overpaid on applications was adjusted to the amount due on allotment.

Mr. Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr. Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited.

Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for Rs. 9 per share, the whole of Mr. Mohit’s shares being included.

Record journal entries in the books of the Company and prepare the Balance Sheet.

Books of Prince Limited

Journal

Date	Particulars		L.F	Amount  (Dr.)	Amount  (Cr.)
	Bank A/c	Dr.		60,000
	To equity share Application A/c				60,000
	(Share Application money received on 30,000 shares)
	Share equity Application A/c	Dr.		60,000
	To equity Share Capital A/c				40,000
	To equity share Allotment A/c				20,000
	( Application money transferred to share capital Account and adjusted to allotment A/c )
	Equity Share Allotment A/c	Dr.		1,00,000
	To equity Share Capital A/c				40,000
	To securities premium A/c				60,000
	(Share allotment money due)
	Bank A/c	Dr.		78,400
	To Share Allotment A/c				78,400
	( Allotment money received on
	Share First Call A/c
	To Equity Share Capital A/c
	( Share First Call money due on 20,000 shares @ Rs. 3 per share )
	Equity Share Capital A/c	Dr.		2,800
	Equity Share premium A/c	Dr.		1,200
	To share Allotment A/c				1,600
	To Equity Share First Call A/c				1,200
	To equity share forfeiture A/c				1,200
	( Equity shares forfeited for 400 shares for non-payment of Allotment and first call )
	Equity share Second and Final Call A/c	Dr.		58,800
	To Equity share capital A/c				58,800
	( Money due on Equity share Second and Final Call for 19,600 shares )
	Bank A/c	Dr.		57,000
	To Equity share Second and Final Call A/c				57,000
	( Money received for 19,000 shares )
	Share Capital A/c	Dr.		6,000
	To Share First Call A/c				1,800
	To Share second and final call A/c				1,800
	To share forfeiture A/c				2,400
	( 600 shares were forfeited for non-payment of first and second call A/c )
	Bank A/c	Dr.		7,200
	Equity share forfeiture A/c	Dr.		800
	To Equity Share Capital A/c				8,000
	( Being 800 shares were reissued @ Rs 9 each share )
	Equity share forfeiture A/c	Dr.		2,000
	To Capital Reserve				2,000
	(Profit on reissue of share transferred to Capital Reserve)

Balance Sheet

Particulars	Note No.	Amount (Rs.)
I. Equity & Liabilities
1.Share holder fund
a.Share Capital	1	1,98,800
b.Reserve and Surplus	2	60,800
Total		2,59,600
2.Non-Current Liabilities
3.Current Liabilities
II.Asset
1.Non-Current Assets
2.Current Assets
a.Cash and Cash equivalents	3	2,59,600
Total		2,59,600

Notes to Account

Note No	Particulars		Amount (Rs.)
1.	Authorised Capital ……..Shares @ Rs 10 each
	Issued Capital 20,000 shares @ Rs 10 each		2,00,000
	Subscribed, Called up ,paid up share Capital 19,800 shares @ Rs 10 each	1,98,000
	add: share forfeiture	800	1,98,800
2.	Reserve and Surplus
	Securities premium	58,800
	Capital Reserve	2,000	60,800
3.	Cash and Cash equivalents
	Cash at Bank		2,59,600

WN 1: Calculation of unpaid amount on allotment by Mohit 

Shares applied by Mohit

=`\frac{30,000 }{ 2,000}\times 400` = 600

Money received on Application	600×2	1,200
Less: Adjusted on application	400×2	(800)
Excess amount received		400

Amount due on Allotment	400×5	2,000
Less: Excess amount received		(400)
Amount unpaid on allotment		1,600

WN 2: Calculation of Amount for Capital Reserve  

Amount forfeited on Mohit’s 400 shares	600×2	1,200
Amount forfeited on Joly’s 400 shares	400 × 4	1,600
Total		2,800
Less: Discount allowed on 800 shares reissued		(800)
Amount to be transferred to Capital Reserve		2,000

Chapter-1 Accounting for Share Capital-II

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