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7.22 Double Entry Book Keeping (Section A)—ISC XII

Illustration 15.
Reliable Ltd. was registered with an authorised capital of ` 20,00,000 in ` 10 per Equity Share.
It invited applications for issuing 1,00,000 Equity Shares at a premium of ` 2 per share.
The amount was payable as follows:
On application ` 4 per share (including premium);
On allotment ` 3 per share;

On first and final call Balance.
Applications were received for 1,30,000 shares. Applications for 10,000 share were rejected
and the application money received on them was refunded. Pro rata allotment was made to
the remaining applications. Amount overpaid on these applications was adjusted towards
the amount due on allotment. Sameer who had applied for 1,200 shares, failed to pay the
allotment and call money. The company forfeited his shares out of which 800 shares were
reissued to Sanjay of ` 9 per share fully paid-up.
You are required to:
(i) Pass Journal entries in the books of the company through Calls-in-Arrears Account.
(ii) Prepare the Shares Allotment Account. (ISC 2013)

Solution: In the Books of Reliable Ltd.
(i) JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 5,20,000
To Equity Shares Application A/c 5,20,000
(Being the application money received on 1,30,000 shares
@ ` 4 per share)
Equity Shares Application A/c ...Dr. 5,20,000
To Equity Share Capital A/c (1,00,000 × ` 2) 2,00,000
To Securities Premium Reserve A/c (1,00,000 × ` 2) 2,00,000
To Bank A/c (10,000 × ` 4) 40,000
To Equity Shares Allotment A/c (20,000 × ` 4) 80,000
(Being the application money adjusted and surplus refunded)
Equity Shares Allotment A/c ...Dr. 3,00,000
To Equity Share Capital A/c 3,00,000
(Being the allotment money due on 1,00,000 shares @ ` 3 per share)
Bank A/c ...Dr. 2,17,800
Calls-in-Arrears A/c ...Dr. 2,200
To Shares Allotment A/c 2,20,000
(Being the allotment money received except on 1,000 shares) (WN 2)
Equity Shares First and Final Call A/c ...Dr. 5,00,000
To Equity Share Capital A/c 5,00,000
(Being the first and final call made @ ` 5 per share)