Problem on issue, forfeiture and re issue of shares by N. Bala Murali Krishna

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Company Accounts

Share Capital

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1) Murali Krishna Ltd. Invited applications for 50,000 shares Rs.10 each at a premium of Rs 2 per share. The amount on shares was payable as  Rs.5 on application, Rs.4 on Allotment (including premium) Balance on first and final call.Application received for 82,500 shares and 20,000 Applications were totally rejected and money refunded. Remaining applicants were alloted on pro-rata basis. Excess application money was to be adjusted against allotment. Nishant who had applied for 1,250 shares failed to pay the amount due on allotment and call. The Company forfeited his shares & reissued 500 shares at Rs.11 per share as fully paid. Pass Journal Entries.

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ApplicationDate Particulars L.F Debit Credit 1   

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Bank A/c Dr. (82,500 X 5) To Share Application A/c(Being Share Application money received)

  4,12,500   

4,12,500

 4,12,500

2,50,000 62,500

 1,00,000

Share Application A/c Dr. To Share Capital A/c (50,000 X 5) To Share Allotment A/c (12,500 X 5) To Bank A/c (20,000 X 5)(Being share allotted and amount adjusted)

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AllotmentDate Particulars L.F Debit Credit 3     4

Share Allotment A/c Dr. (50,000 X 4) To Share Capital A/c (50,000 X 2) To Securities Premium A/c (50,000 X 2)(Being Allotment money due )

  2,00,000    

1,34,7502,750

 1,00,0001,00,000

1,37,500Bank A/c Dr.Calls-in-Arrears A/c Dr. To Share Allotment A/c(Being Share Allotment money received except 1,000 Shares)

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First CallDate Particulars L.F Debit

(Rs.)Credit(Rs.)

5    6

Share First and Final Call A/c Dr. To Share Capital A/c (50,000 X 3)(Being Share First and Final Call money due)

  1,50,000   

1,47,0003,000

 1,50,000

1,50,000 

Bank A/c Dr. (49,000 X 3)Calls-in-Arrears A/c Dr. (1,000 X 3) To Share First and Final Call A/c(Being Share First and Final Call money received except 1,000 Shares)

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Forfeiture and ReissueDate Particulars L.F Debit Credit 7      8    

Share Capital A/c Dr. (1,000 X 10)Securities Premium A/c Dr. (1,000 X 2) To Share Forfeiture A/c To Calls-in-Arrears A/c (2,750 + 3,000) (Being shares are forfeited for non-payment of Allotment and First Call)

  10,0002,000

5,500  

6,2505,750

5,000500

Bank A/c Dr. (500 X 11) To Share Capital A/c (500 X 10) To Securities Premium A/c (500 X 1)(Being Forfeited Shares are Re-issue at Rs.11 fully paid up)

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Capital Reserve Date Particulars L.F Debit

(Rs.)Credit(Rs.)

  9 Share Forfeiture A/c Dr. To Capital Reserve A/c(Being balance in Share Forfeiture A/c transfer to Capital Reserve on 500 Shares)Note: Application time 1,250 x 5 = 6250 we got, but we alloted 1,000 shares and forfeited. Now we re-issue 500 Shares. So half of the forfeited amount transfer to Capital Reserve.

  3,125  3,125

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N. Bala Murali Krishna