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8.10 Double Entry Book Keeping—CBSE XII

Notes to Accounts
1. Share Capital `
Authorised Capital
... Equity Shares of ` 10 each ...
Issued Capital
20,000 Equity Shares of ` 10 each 2,00,000
Subscribed Capital
Subscribed and fully paid-up
19,800 Equity Shares of ` 10 each 1,98,000
Add: Forfeited Shares A/c (Note) 1,000
1,99,000
2. Reserves and Surplus
Capital Reserve 2,160
Securities Premium Reserve (19,600 shares @ ` 2 per share) 39,200
41,360
3. Cash and Cash Equivalents
Cash at Bank 2,40,360
Note: Since 200 shares of Mohan have not yet been reissued, the forfeited amount in respect of these shares
remain in the Forfeited Shares Account.
Illustration 3.
MD Enterprises Ltd. invited applications for 50,000 Equity Shares of ` 10 each payable
along with application. Applications were received for 60,000 shares. Allotment was made on
pro rata basis.
Pass necessary Journal entries.

Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 6,00,000
To Equity Shares Application and Allotment A/c 6,00,000
(Application received for 60,000 Equity Shares @ ` 10 each)
Equity Shares Application and Allotment A/c ...Dr. 5,00,000
To Equity Share Capital A/c 5,00,000
(Shares allotted to all the applicants on pro rata)
Equity Shares Application and Allotment A/c ...Dr. 1,00,000
To Bank A/c 1,00,000
(Excess application money refunded)
Alternatively, a compound entry can be passed instead of Last two entries as follows:
Equity Shares Application and Allotment A/c ...Dr. 6,00,000
To Equity Share Capital A/c 5,00,000
To Bank A/c 1,00,000
(Equity shares allotted on pro rata basis to all applicants and excess
application money refunded)