Page 172 - MA-12

Joint Stock Company—Issue of Shares 6.31

2. Khushal applied for 10,500 shares.
3,50,000
Therefore, he must have been allotted 3,00,000 × 10,500 = 9,000 shares. He has not paid the first and
the second call money. As such,
(a) the first call money will be received on
2,85,000 shares [3,00,000 – 6,000 (Honey) – 9,000 (Khushal)], and
(b) the second call money will be received on 2,82,000 shares.
[i.e., 3,00,000 – 6,000 (Honey) – 9,000 (Khushal) – 3,000 (Sukmani)]
3. 11,000 shares have been reissued which include 9,000 shares of Khushal and the balance 2,000 shares
of Honey. `
` 15,000
Amount forfeited on 2,000 shares of Honey = 6,000 × 2,000 5,000
Amount forfeited on 9,000 shares of Khushal 45,000
Total amount forfeited on 11,000 reissued shares 50,000
Less: Reissue discount 11,000
Gain on reissue to be transferred to Capital Reserve 39,000
4. Amount forfeited on 6,000 shares of Honey = ` 15,000
Therefore, the balance of Forfeited Shares Account on 4,000 unissued shares
` 15,000
= × 4,000 = ` 10,000.
Illustration 18. 6,000
Reliable Investments issued a prospectus inviting applications for 4,000 Equity Shares of
` 20 each at a Premium of ` 4 per share payable as under:
On application ` 4 per share;
On allotment ` 10 per share (including Premium);
On first call ` 6 per share;
On second call ` 4 per share.
Applications were received for 6,000 shares and allotment was made on pro rata basis to
the applicants of 4,800 shares, the applications for the remaining shares were refused. The
money overpaid on application was used on account of sums due on allotment.
Harish to whom 80 shares were allotted, could not pay the allotment money and on his
subsequent failure to pay the first call, his shares were forfeited after the first call.
Mukesh to whom 120 shares were allotted, failed to pay the two calls and his shares were
forfeited after the second call.
Of the shares forfeited, 160 shares were sold to Suresh credited as fully paid @ ` 18 per share,
all of Harish’s forfeited shares being included.
Pass Journal entries in the books of the company to record the above transactions.
Solution: JOURNAL OF RELIABLE INVESTMENTS

Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 24,000
To Shares Application A/c 24,000
(Being the application money received for 6,000 shares @ ` 4 per share)
Shares Application A/c ...Dr. 24,000
To Share Capital A/c (4,000 × ` 4) 16,000
To Shares Allotment A/c (800 × ` 4) 3,200
To Bank A/c (1,200 × ` 4) 4,800
(Being the shares allotted on pro rata to all the applicants and
excess money adjusted)