Page 262 - ISCDEBK-12

Final Accounts of Companies—Application of Schedule III, Part I... 10.13

Master Question and Advanced Level Questions

Illustration 6.
Ell Kay Ltd. is a company registered with authorised capital of 5,00,000 Equity Shares of ` 10 each and
50,000 Preference Shares of ` 100 each. It has existing paid-up capital as follows:
(i) 50,000 Equity Shares of ` 10 each,
(ii) 5,000, 10% Preference Shares of ` 100 each.
The amount received by the company as above is lying deposited in a Bank Account.
It purchased machinery from Excel Ltd. of ` 11,50,000 and paid the consideration by issuing cheque of
` 50,000 and balance by issuing 15% Preference Shares of ` 100 each at a premium of 10%.
It issued to public for subscription 2,00,000 Equity Shares of ` 10 each at a premium of ` 5 and also 25,000,
10% Preference Shares of ` 100 each at par. Amounts were payable as follows:

Equity Shares (`) 10% Preference Shares (`)
On Application 5 50
On Allotment 8 30
On First and Final Call Balance Amount Balance Amount
Applications were received for 5,00,000 Equity Shares and 40,000 Preference Shares.

Equity Shares were allotted on pro rata basis to all the applicants and excess application money was
retained to be adjusted towards allotment money and call money. Amount due on allotment and
calls were received except allotment money on 1,000 Equity Shares from Anil and call money on
1,000 Equity Shares of Anil and 2,000 Equity Shares of Gopal. Shares of Anil were forfeited. Out of these
forfeited shares, 500 Equity Shares were reissued at ` 15 each as fully paid-up.

Applications for 15,000, 10% Preference Shares were not allotted any share and amount was refunded.
All amounts due on Preference Shares were received on due dates except first and final call on 1,000
Preference Shares. Amit holder of 500, 10% Preference Shares paid the call money together with
allotment money.
Pass Journal entries, prepare Calls-in-Arrears and Calls-in-Advance Accounts and also the Balance Sheet.

Solution: Ell Kay Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Machinery A/c ...Dr. 11,50,000
To Excel Ltd. 11,50,000
(Being the machinery purchased from Excel Ltd.)
Excel Ltd. ...Dr. 11,50,000h
To 15% Preference Share Capital A/c 10,00,000
To Securities Premium Reserve A/c 1,00,000
To Bank A/c 50,000
(Being the amount due to Excel Ltd. settled)