Page 179 - ISCDEBK-12

Joint Stock Company—Issue of Shares 7.15

Working Notes:
1. Amount of Calls-in-Arrears: 2. Amount transferred to Capital Reserve:
(a) No. of shares applied by Ram 72 Amount forfeited on 60 shares = ` 144
(b) Money paid on application (72 × ` 2) ` 144 ∴ Amount forfeited on 20 shares
(c) Excess application money ` 24 (` 144 × 20/60) ` 48
[` 144 – (60 × ` 2)] Less: Discount allowed on 20 shares reissued ` 20
(d) Amount due on allotment (60 × ` 5) ` 300 Gain (Profit) transferred to the Capital Reserve ` 28
(e) Amount not paid by Ram (` 300 – ` 24) ` 276
Illustration 12.

Fortunate Limited issued 10,000 Equity Shares of ` 100 each. The amount was payable
as under:
On application ` 20; On first call ` 25;
On allotment ` 30; On second call ` 25.

The company received applications for 10,000 Equity Shares. The company allotted the
shares. The Directors made both the calls.

Mr. Unlucky holding 100 shares did not pay both the calls whereas Mr. Unsuccessful
holding 40 shares did not pay the second call.
The Directors forfeited the shares on which both the calls were not paid. They were
reissued as fully paid @ ` 75 per share.
Record the transactions in the Journal of the company. Also, show relevant items as they
would appear in the Balance Sheet of the company.

Solution: In the Books of Fortunate Limited
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c (10,000 × ` 20) ...Dr. 2,00,000
To Equity Shares Application A/c 2,00,000
(Being the application money received on 10,000 shares)

Equity Shares Application A/c ...Dr. 2,00,000
To Equity Share Capital A/c 2,00,000
(Being the application money transferred to Equity Share Capital
Account on allotment of shares)
Equity Shares Allotment A/c ...Dr. 3,00,000
To Equity Share Capital A/c 3,00,000
(Being the allotment money due)

Bank A/c (10,000 × ` 30) ...Dr. 3,00,000
To Equity Shares Allotment A/c 3,00,000
(Being the allotment money received)