Page 188 - ISCDEBK-12

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

Master Questions and Advanced Level Questions

Illustration 16.

Pee Kay Ltd. issued 2,00,000 shares of ` 10 each at a premium of 20% to public for subscription payable
as follows:
On Application ` 3;
On Allotment ` 3;
On First call ` 3 (including ` 1 as premium); and
On Second and final call ` 3 (including ` 1 as premium).
Applications were received for 5,00,000 shares. The company allotted shares to all the applicants on
pro rata basis and the excess application money to be retained towards allotment and calls. The company
received the amounts due on due dates except from Dinesh holding 200 shares who failed to pay the
two calls. His shares were subsequently forfeited. Out of the forfeited shares, 150 shares were reissued for
` 13 credited as fully paid-up.
Pass the Journal entries and draw the Balance Sheet having share capital.
Solution: JOURNAL OF PEE KAY LTD.

Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 15,00,000
To Shares Application A/c 15,00,000
(Being the application money received for 5,00,000 shares @ ` 3)
Shares Application A/c ...Dr. 15,00,000
To Share Capital A/c 6,00,000
To Shares Allotment A/c 6,00,000
To Calls-in-Advance A/c 3,00,000
(Being the shares allotted on pro rata to all the applicants and
excess money adjusted)
Shares Allotment A/c ...Dr. 6,00,000
To Share Capital A/c 6,00,000
(Being the allotment money due on 2,00,000 shares @ ` 3)
Shares First Call A/c ...Dr. 6,00,000
To Share Capital A/c 4,00,000
To Securities Premium Reserve A/c 2,00,000
(Being the first call due on 2,00,000 shares @ ` 3 per share including
securities premium of ` 1 per share)
Bank A/c (WN 1) ...Dr. 2,99,700
Calls-in-Advance A/c ...Dr 3,00,000
Calls-in Arrears A/c (WN 2) ...Dr. 300
To Shares First Call A/c 6,00,000
(Being the amount adjusted from Calls-in-Advance and
balance received except on 200 shares)
Shares Second and Final Call A/c ...Dr. 6,00,000
To Share Capital A/c 4,00,000
To Securities Premium Reserve A/c 2,00,000
(Being the second and final call due, including ` 1 per share
towards securities premium)