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Joint Stock Company—Issue of Shares 7.11

Equity Shares Allotment A/c ...Dr. 4,00,000
To Equity Share Capital A/c 2,00,000
To Securities Premium Reserve A/c 2,00,000
(Being the allotment money due)
Bank A/c ...Dr. 3,52,000
To Equity Shares Allotment A/c 3,52,000
(Being the amount received)
Equity Shares First and Final Call A/c ...Dr. 1,00,000
To Equity Share Capital A/c 1,00,000
(Being the first and final call due)
Bank A/c ...Dr. 1,00,000
To Equity Shares First and Final Call A/c 1,00,000
(Being the amount received)
Illustration 9 (Forfeiture of Shares issued at Par).
Dawn Ltd. issued for subscription 1,00,000 shares of ` 10 each on the following terms:
` 3 payable on application, ` 4 on allotment, the balance as and when required.
Applications were received for 1,40,000 shares. Allotment was made as under:
80,000 applications were allotted 80,000 shares;
50,000 applications were allotted 20,000 shares;
10,000 applications were not allotted any share.
Excess application money after applying towards allotment is to be refunded.
A shareholder who applied for 1,000 shares and was given 1,000 shares failed to pay the
allotment money. His shares were forfeited.
Pass Journal entries to record the above transactions.
Solution: In the Books of Dawn Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 4,20,000
To Shares Application A/c 4,20,000
(Being the application money received on 1,40,000 shares @ ` 3 per share)
Shares Application A/c ...Dr. 4,20,000
To Share Capital A/c (1,00,000 × ` 3) 3,00,000
To Shares Allotment A/c (20,000 × ` 4) 80,000
To Bank A/c (10,000 × ` 3 + ` 10,000) (Note 1) 40,000
(Being the application money adjusted and surplus refunded upon allotment)
Shares Allotment A/c ...Dr. 4,00,000
To Share Capital A/c 4,00,000
(Being the allotment money due on 1,00,000 shares @ ` 4 per share)
Bank A/c ...Dr. 3,16,000
Calls-in-Arrears A/c ...Dr. 4,000
To Shares Allotment A/c 3,20,000
(Being the allotment money received on all shares @ ` 4 per share
except on 1,000 shares)
Share Capital A/c ...Dr. 7,000
To Calls-in-Arrears A/c 4,000
To Forfeited Shares A/c 3,000
(Being 1,000 shares forfeited for non-payment of allotment money)