Raunak Cotton Ltd. issued a prospectus inviting applications for 6,000 equity shares of Rs 100 each at a premium of Rs 20 per shares, payable as follows:
| On Application | Rs.20 |
| On Allotment | Rs.50 (including premium) |
| On first call | Rs.30 |
| On final call | Rs.20 |
Applications were received for 10,000 shares and allotment was made Pro-rata to the applicants of 8,000 shares, the remaining applications Being refused. Money received in excess on the application was adjusted toward the amount due on allotment. Rohit, to whom 300 shares were allotted failed to pay allotment and calls money, his shares were forfeited. Itika, who applied for 600 shares, failed to pay the two calls and her share were also forfeited. All these shares were sold to Kartika as fully paid for Rs 80 per shares.
Books of Raunak Cotton Ltd.
Journal
| Date | Particulars | L.F | Amount | Amount | |
| Bank A/c | Dr. | 2,00,000 | |||
| To Share Application A/c | 2,00,000 | ||||
| (Share application money received on 10,000 shares @ Rs.20 each share) | |||||
| Share Application A/c | Dr. | 2,00,000 | |||
| To Share Capital A/c | 1,20,000 | ||||
| To share Allotment A/c | 40,000 | ||||
| To Bank A/c | 40,000 | ||||
| (Share Application money transferred to Share Capital A/c ,Pro-rata to the applicants of 8,000 shares and reaming 2,000 shares are returned ) | |||||
| Share Allotment A/c | Dr. | 3,00,000 | |||
| To share Capital A/c | 1,80,000 | ||||
| To Share Premium A/c | 1,20,000 | ||||
| (Money due on share allotment ) | |||||
| Bank A/c | Dr. | 2,47,000 | |||
| To share Allotment A/c | 2,47,000 | ||||
| (Allotment money received excerpt 300 Shares) | |||||
| Share First Call A/c | Dr. | 1,80,000 | |||
| To Share Capital A/c | 1,80,000 | ||||
| (Money Due on Share First Call A/c) | |||||
| Bank A/c | Dr. | 1,57,500 | |||
| To Share First Call A/c | 1,57,500 | ||||
| (Share First Call A/c Money received except 750 shares {300+450}) | |||||
| Share Second and Final Call A/c | Dr. | 1,20,000 | |||
| To share Capital A/c | 1,20,000 | ||||
| (Money Due on Share Second and final call A/c ) | |||||
| Bank A/c | Dr. | 1,05,000 | |||
| To Share Second and Final Call A/c | 1,05,000 | ||||
| (Share Second and Final Call A/c Money received excerpt 750 shares) | |||||
| Share Capital A/c (750 X 100) | Dr. | 75,000 | |||
| Share Premium A/c (300 X 20) | 6,000 | ||||
| To Share Allotment A/c | 13,000 | ||||
| To Share First call A/c | 22,500 | ||||
| To Share second and final call A/c | 15,000 | ||||
| To Share Forfeiture A/c | 30,500 | ||||
| (Share forfeited for 750 Shares) | |||||
| Bank A/c | Dr. | 60,000 | |||
| Share Forfeiture A/c | 15,000 | ||||
| To Share Capital A/c | 75,000 | ||||
| (Forfeiture shares reissued at @ Rs.8 per Share) | |||||
| Share Forfeiture A/c | Dr. | 15,500 | |||
| To Capital Reserve A/c | 15,500 | ||||
| (Share Forfeiture A/c transferred to capital reserve A/c) | |||||
Working Note:
1.Calculation of Numbers of shares applied by Rohit-
= `\frac{Total Numbers of Applied Share }{ Total Numbers of Allotted Share}\times Number of allotted share`
= `\frac{8,000 }{ 6,000}\times 300`
= 400 Shares
2. Calls in Arrears on Rohit's Allotment
| Money received on Application | (400×20) | 8,000 |
| Less: Transferred to share capital | (300×20) | 6,000 |
| Excess adjusted on allotment | 2,000 | |
| Allotment due | (300×50) | 15,000 |
| Less: Excess adjustment on allotment | 2,000 | |
| Call in arrears | 13,000 |
3. Number of Shares allotted to Itika
= `\frac{Total Numbers of Applied Share }{ Total Numbers of Allotted Share}\times Number of allotted share`
= `\frac{8,000 }{ 6,000}\times 450`
= 450 Shares