Company Accounts

Share Capital

Easy

Eicher Ltd. issued 50,000 shares of Rs.10 each at a premium of Rs.5 per share payable as follows:

On application Rs.3 per share

On allotment Rs.5 (including Rs.3 Premium)

On First Call Rs.5 (including Rs.2 Premium)

On Final Call Balance amount

Application were received for 72,000 shares. Directors allotted 50,000 shares to the applicants applying for 65,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards sum due on allotment. All the money was duly received with the exception of first call from Rahul, who applied for 2,600 shares. Due to non payment of 1st call his share were forfeited immediately. Later on these share were re-issued at minimum issue price.

On the basis of following case study, answer the question.

Record journal entry for forfeiture of Rahul's shares.

Share Capital A/c Dr 20,000 ---

Securities Premium Reserve A/c Dr 10,000 ---

To Share 1st call A/c 10,000

To Share final call A/c 4,000

To Share forfeiture A/c 16,000

Share Capital A/c Dr 20,000 ---

To Share 1st call A/c 10,000

To Share final call A/c 4,000

To Share forfeiture A/c 6,000

Share Capital A/c Dr 16,000

Securities Premium Reserve A/c Dr 4,000

To Share 1st call A/c 10,000

To Share forfeiture A/c 10,000

Share Capital A/c Dr 16,000

To Calls in Arrears A/c 10,000

To Share forfeiture A/c 6,000

✅ Correct Option: 3

Rahul was allotted $\frac{50{,}000}{65{,}000}\times 2{,}600 = 2{,}000$ shares. Final call is not yet made, so amount called = Rs.8 (capital portion) per share; Share Capital Dr = $2{,}000\times 8 = 16{,}000$ . First call premium of Rs.2 was credited but unpaid, so Securities Premium Reserve Dr 4,000. First call unpaid = Rs.10,000. Capital actually received (application + allotment capital) = Rs.10,000, credited to Share Forfeiture A/c.

Question 47

Identify the amount by which bank account would be debited/credited on refund of rejected applications

Question 48

Determine the amount to be transferred to Capital Reserve on reissue of Rahul's Shares

Question 49

Identify the ratio in which shares are issued on Pro-rata basis.

Question 50

Before forfeiture of Rahul's shares, who are required to issue notice in this regard.

Record journal entry for forfeiture of Rahul's shares.

Solution

More from this set:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)