Page 19 - DEBK12

Chapter 8 . Company Accounts—Accounting for Share Capital 8.9

Share Capital A/c ...Dr. 6,000
To Shares First Call A/c 1,800
To Shares Second and Final Call A/c 1,200
To Forfeited Shares A/c 3,000
(Forfeiture of Mohan’s 600 shares, for non-payment of both the calls)
Bank A/c (800 × ` 9) ...Dr. 7,200
Forfeited Shares A/c (800 × ` 1) ...Dr. 800
To Share Capital A/c 8,000
(Reissue of 800 shares, discount allowed being ` 800)
Forfeited Shares A/c ...Dr. 2,160
To Capital Reserve A/c (WN 4) 2,160
(Profit on reissue of 800 shares transferred to Capital Reserve)
Working Notes:
1. Calculation of amount not paid by Ramesh on allotment:
(a) Number of shares applied by Ramesh:
20,000 shares allotted to applicants for 24,000
400 shares allotted to applicants who applied for 24,000/20,000 × 400 = 480 shares. `
(b) Ramesh paid only application money @ ` 2 on 480 shares 960
Less: Application money due on shares allotted (400 × ` 2) 800
Excess application money to be adjusted 160
(c) Allotment money due on 400 shares @ ` 5 2,000
Less: Excess money transferred from Shares Application A/c [WN 1(b)] 160
Amount not paid by Ramesh on allotment 1,840
2. Allotment money received = ` 1,00,000 – ` 8,000 – ` 1,840 = ` 90,160.
3. Since the question is silent as to utilisation of ` 160 (excess received on application from Ramesh) between
Share Capital and Securities Premium, it has been assumed that the entire excess of ` 160 is exclusively for
share capital and hence credited to Forfeited Shares Account.
4. The amount of ` 2,160 transferred from Forfeited Shares Account to Capital Reserve has been
calculated as:
`
Amount relating to shares of Ramesh (480 × ` 2) 960
Less: Discount allowed on reissue 400 560
Amount relating to shares of Mohan (400 × ` 5) 2,000
Less: Discount allowed on reissue of 400 shares 400 1,600
2,160
BALANCE SHEET as at ...
Particulars Note No. `
I. EQUITY AND LIABILITIES
Shareholders’ Funds
(a) Share Capital 1 1,99,000
(b) Reserves and Surplus 2 41,360
Total 2,40,360
II. ASSETS
Current Assets
Cash and Cash Equivalents 3 2,40,360
Total 2,40,360