Page 176 - MA-12

Joint Stock Company—Issue of Shares 6.35

2. Amount Received on Allotment:
`
Amount due (2,00,000 × ` 5) 10,00,000
Less: Adjusted at the time of share application 4,00,000
6,00,000
Less: Calls-in-Arrears (not paid by Madhu) 2,700
5,97,300
Illustration 20.
Eros Ltd. issued a prospectus inviting applications for 2,000 shares of ` 10 each at a
premium of ` 4 per share, payable as follows:
On application ` 6 (including ` 1 premium);
On allotment ` 2 (including ` 1 premium);
On first call ` 3 (including ` 1 premium);
On second and final call ` 3 (including ` 1 premium).
Applications were received for 3,000 shares and pro rata allotment was made on the
applications for 2,400 shares. It was decided to utilise the excess application money towards
the amount due on allotment.
Ajay, to whom 40 shares were allotted, failed to pay the allotment money and on his
subse quent failure to pay the first call, his shares were forfeited.
Raghav, who applied for 72 shares, failed to pay the two calls and on his such failure,
his shares were forfeited.
Of the shares forfeited, 80 shares were sold to Pooja credited as fully paid for ` 9 per share,
the whole of Raghav’s shares being included. Prepare Journal, Cash Book and Balance Sheet.
Solution: In the Books of Eros Ltd.
Dr. CASH BOOK (BANK COLUMN ONLY) Cr.
Particulars ` Particulars `
To Shares Application A/c 18,000 By Shares Application A/c 3,600
(3,000 × ` 6) (600 × ` 6)
To Shares Allotment A/c 1,568 By Balance c/d 28,088
To Shares First Call A/c 5,700
(1,900 × ` 3)
To Shares Second and Final Call A/c 5,700
(1,900 × ` 3)
To Share Capital A/c 720
31,688 31,688

JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Shares Application A/c ...Dr. 14,400
To Share Capital A/c (2,000 × ` 5) 10,000
To Securities Premium Reserve A/c (2,000 × ` 1) 2,000
To Shares Allotment A/c (400 × ` 6) 2,400
(Being the application money adjusted on allotment)