Page 148 - MA-12

Joint Stock Company—Issue of Shares 6.7

Ronak Ltd. ...Dr. 2,40,000
To Bank A/c (10% of ` 24,00,000) 2,40,000
(Being the part payment made to vendor by cheque)
Ronak Ltd. ...Dr. 21,60,000
To Equity Share Capital A/c 18,00,000
To Securities Premium Reserve A/c 3,60,000
(Being the issue of 18,000 Equity Shares at 20% premium to Ronak Ltd.)
Note: No. of Equity Shares to be issued = ` 21,60,000/` 120 = 18,000 shares.
Illustration 3.
M/s Blue Chips Ltd. issued 2,000 shares of ` 100 each credited as fully paid to the promoters
for their services and issued 1,000 shares of ` 100 each credited as fully paid to the
underwriters for their underwriting services. Journalise these transactions.

Solution: JOURNAL OF M/S BLUE CHIPS LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
Incorporation Costs (or Goodwill) A/c ...Dr. 2,00,000
To Promoters’ A/c 2,00,000
(Being the amount due to promoters)
Promoters’ A/c ...Dr. 2,00,000
To Share Capital A/c 2,00,000
(Being the issue of 2,000 shares of ` 100 each to promoters)
Underwriting Commission A/c ...Dr. 1,00,000
To Underwriter’s A/c 1,00,000
(Being the underwriting commission due on shares)
Underwriters’ A/c ...Dr. 1,00,000
To Share Capital A/c 1,00,000
(Being the issue of 1,000 shares of ` 100 each at par to underwriters)
Illustration 4.
X Ltd. forfeited 400 shares of ` 10 each (` 8 called-up) issued at 20% premium (payable
on final call) to Mr. Ashok on which he had paid ` 2 per share. Journalise.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Share Capital A/c (400 × ` 8) ...Dr. 3,200
To Calls-in-Arrears A/c (400 × ` 6) 2,400
To Forfeited Shares A/c (400 × ` 2) 800
(Being 400 shares forfeited for non-payment of called-up amount)
Illustration 5.
XYZ Ltd. was incorporated with an authorised capital of 1,00,000 Equity Shares of
` 10 each. The directors decided to allot 10,000 shares credited as fully paid to the
promoters for their services. The company also purchased Land and Building from
Y Co. Ltd. for ` 4,00,000 payable in fully paid-up shares of the company. The balance of
the shares were issued to the public, which were fully subscribed and paid for.
You are required to pass Journal entries and show the ‘Share Capital’ in the Balance Sheet
of the Company as at 31st March, 2018 and also show ‘Note to Accounts’ as per Schedule
III of the Companies Act, 2013.