RAHUL SINGH

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SHARE CAPITAL OF THE COMPANY
Capital is essential for a trading concern. A company collects capital by inviting the public to buy
its shares through a document known as prospectus. The capital is usually divided into different
units with definite value called shares. Section 2(46) of the companies act defines a share as “a
share in the share capital of the company and includes stock except where a distinction
between stock and share is expressed or implied”. A share is not a sum of money but is an
interest measured by a sum of money, and made up of various rights contained in the contract.
A share is a fractional part of the share capital which forms the basis of ownership in a
company.
Share capital refers to the amount of capital raised or to be raised by a company by the issue of
shares. The main divisions of share capital are as follows:-
Authorised capital - The amount of capital with which the company intends to be registered is
called Nominal or Registered or Authorised capital. It is the maximum amount which the
company is authorised to raise by way of public subscription.
Issued capital – The part of the authorised capital which is offered to the public for subscription
is called issued capital.
Subscribed capital – It is that part of the issued share capital which is actually taken up by the
public. If the whole issued share capital is not subscribed for by the public, the balance of the
issued share capital is called unsubscribed share capital.
Called up capital – It is that portion of the subscribed capital which has been called up by the
company. The difference between subscribed capital and called up capital is known as uncalled
capital
Paid up capital – It represents the amount received against the calls made on the shares. The
unpaid balance of the called up capital is known as calls in arrears.

Types of Issue of Shares

• Issue of Shares in Cash(Lump Sum)
• Issue of Shares in Cash(Installment)
• Issue of Shares in Consideration
Issue of Shares in Cash (Lumpsum)
Journal Entries
(i) Receiving Shares Application Money:
Bank A/c… …Dr
To Shares Application and Allotment A/c
(ii) For Allotment of Shares:
Shares Application and Allotment A/c… …Dr
To Share Capital A/c

Issue of Shares in Cash (Installment)

Issue of Shares at Par
(a) When Application Money is Received:
Bank A/c…..Dr
To Shares Application

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(No of Shares Applied* Application Per Share)
(b) On Allotment of Shares
Share Application A/c….Dr
To Share Capital
(Application money on Shares Allotted)
(c) Amount Due on Allotment
Shares Allotment A/c… Dr
To Share Capital
(No of Shares Allotted*Allotment Per Share)
(d) On receipt of Allotment Money
Bank A/c…Dr
To Shares Allotment A/c
(e) On First Call being Due
Shares First Call A/c… Dr
To Share Capital
(No Of Allotted Shares Called* First Call Per share)
(f) On Receipt of First Call
Bank A/c… Dr
To Shares First Call
Issue of Shares at Premium
(a) When Application Money is Received:
Bank A/c….. Dr
To Shares Application
(No of Shares Applied* Application Per Share)
(b) On Allotment of Shares
Share Application A/c….Dr
To Share Capital
To Securities Premium Reserve
(Application money on Shares Allotted)
(c) Amount Due on Allotment
Shares Allotment A/c…Dr
To Share Capital
To Securities Premium Reserve
(No of Shares Allotted*Allotment Per Share)
(d) On receipt of Allotment Money
Bank A/c…Dr
To Shares Allotment A/c
(e) On First Call being Due
Shares First Call A/c… Dr
To Share Capital
To Securities Premium Reserve
(No Of Allotted Shares Called* First Call Per share)
(g) On Receipt of First Call
Bank A/c…Dr

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To Shares First Call

CALLS-IN-ARREARS
• The amount called by the company either as allotment or call money and not paid by the
shareholders is called Calls-in-Arrears
• Effect: (i) As Calls-in-Arrears is the call money receivable (i.e. an Asset), we will debit with the
amount unpaid.
• As the call money is not yet received we will deduct the unpaid amount from the Bank.
Effect on Entry:
Bank A/c ( Allotment Money to be received- Unpaid Amount)……Dr
Calls-in-Arrears A/c(Unpaid Amount)…. ...Dr
To Share Allotment
Calls-in-Advance
• Excess money received by the company which has been called up.
• Advances are Liabilities and hence to be credited with either allotment or call.
• As money is received in advance so Bank balance will be debited(Increase).
• Note: Calls in Advance will be debited soon the call has been made.

Interest

Calls-in-Arrears Calls-in-Advances

Advance being a liability, interest

Arrear being an asset, interest will be will be allowed/paid from
charged from shareholders for non shareholders for early payment of
payment of call money. Thus int is an call money. Thus interest is an
income for company expense

For Interest Due:

For Interest Due:
Interest on Calls-in-AdvanceA/c.. Dr
Sundry Shareholders A/c.. Dr
To Sundry Shareholders A/c
To Interest on Calls-in-Arrears
For Payment:
For Receipt:
Sundry Shareholders A/c... Dr
Bank A/c.... Dr
To Bank
To Sundry Shareholders

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Illustration 1: DLF Ltd issued 100,000 equity shares of ₹10 each payable as follows: Application ₹
3, Allotment ₹2, First Call ₹4 and balance in final call.

Case1: All the shares were subscribed except Naresh holder of 5000 shares did not pay the
allotment money and Sunil holder of 2000 shares did not pay the first call. All the due amount of
Naresh and Sunil were received at the time of Final Call. Pass necessary Journal Entry and show
Calls-in- Arrears Account.

Case 2: All the shares were subscribed and paid except Sumit who did not paid the allotment
money for 2000 shares while Ram who was the holder of 5000 shares paid the final call along
with first call. Sumit paid the due amount at the time of Final Call. Pass necessary Journal Entry

Case 3: All the shares were subscribed and Raju the holder of 1000 shares paid call money along
with Allotment and Arvind the holder of 500 shares paid his first call money at the time of Final
Call. Pass necessary Journal Entry.

Forfeiture of Shares
Journal Entry
Equity Share Capital A/c [No of Shares Forfeited*Called Up Value per share]..Dr
Securities Premium Reserve A/c[If Any]… …Dr
To Calls-in-Arrears A/c[ Amount not yet received]
To Forfeited Shares A/c[ Amount already received]

Securities Premium Reserve

Premium Received Premium Not Received

No Effect Securities Premium Reserve to be Debited
Neither to be Debited Nor to be credit with the prem amount not received.
Simply assume SPR is not given in sums Calls-in-Arrear will include SPR
Note: Never include SPR received in Forfeited Shares A/c.

Reissue of Forfeited Shares

Reissued at Par Reissued at Discount Reissued at Premium

Bank A/c.. Dr Bank A/c.. Dr Bank A/c.. Dr

To Share Capital A/c Forfeited Shares A/c.. Dr To Share Capital A/c
To Share Capital A/c To Securities Premium Reserve A/c

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Journal Entry of Profit on Reissue of Shares

Forfeited Shares A/c… Dr
To Capital Reserve
Important Note
(1) Forfeited Shares = Discount on Re-issue
(2) Capital Reserve: No. of Shares Reissued*( Money Already received per share- Discount on
Reissue)

Illustration 1 :
A Ltd issued 50,000 equity shares of ₹10 each payable as follows Application ₹ 2, Allotment ₹ 3,
First Call ₹ 2.5 and Final Call ₹ 2.5.All the Shares were issued and subscribed except.

Case 1: Raju the holder of 1000 shares did not pay the allotment money and his shares were
forfeited after the failure of final call. All the shares of Raju were forfeited after the failure of
final call. Pass necessary journal entry. These Shares were reissued at (a) 8 per share
(b) 9 per share (c) 11 per share
Case 2: Shivam the holder of 750 shares did not pay the allotment money while Rani the holder
of 1000 shares did not pay the call money and after final call all the shares were forfeited. Pass
necessary journal entry. Reissue (a) All shares at 8 per share (b) 1500 shares at 9 per
share(Including all shares of Shivam)

Solution: In the books of A Ltd

Case 1
Particulars Amount Amount
Bank Ac………………………………………….Dr (50K * 2) 100,000
To Equity Share Application A/c 100,000
Equity Share Application A/c………….Dr 100,000
To Equity Share Capital 100,000
Equity Share Allotment A/c……………Dr 150,000
To Equity Share Capital 150,000
Bank A/c………………………………………..Dr 147,000
Calls in Arrear 3000
To Equity Share Allotment A/c 150,000
Equity Share First Call A/c……………..Dr 125,000
To Equity Share Capital A/c 125,000
Bank A/c………………………………………..Dr 122,500
Calls in Arrear ………….……………………Dr 2,500
To Equity Share First Call A/c 125,000
Equity Share Final Call A/c……………..Dr 125,000
To Equity Share Capital A/c 125,000
Bank A/c………………………………………..Dr 122,500
Calls in Arrear ………….……………………Dr 2,500

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To Equity Share Final Call A/c 125,000
Equity Share Capital A/c……………….Dr (1000 X 10) 10,000
To Calls In Arrear [1000 x (3+2.5+2.5)] 8000
To Share Forfeiture (1000 x 2) 2000
(a)Bank A/c……………………………………..Dr (1000 X 8) 8,000
Share Forfeiture A/c……………………Dr 2000
To Equity Share Capital A/c 10,000
Share Forfeiture A/c…………………..Dr Nil
To Capital Reserve Nil
(b)Bank A/c……………………………………..Dr (1000 X 9) 9,000
Share Forfeiture A/c……………………Dr 1,000
To Equity Share Capital A/c 10,000
Share Forfeiture A/c…………………..Dr 1000
To Capital Reserve 1000
(c)Bank A/c……………………………………..Dr (1000 X 11) 11,000
To Equity Share Capital A/c 10,000
To Securities Premium Reserve 1000
Share Forfeiture A/c…………………..Dr 1000
To Capital Reserve 1000

Case 2
Particulars Amount Amount
Bank Ac………………………………………….Dr (50K * 2) 100,000
To Equity Share Application A/c 100,000
Equity Share Application A/c………….Dr 100,000
To Equity Share Capital 100,000
Equity Share Allotment A/c……………Dr 150,000
To Equity Share Capital 150,000
Bank A/c………………………………………..Dr 147,750
Calls in Arrear 2250
To Equity Share Allotment A/c 150,000
Equity Share First Call A/c……………..Dr 125,000
To Equity Share Capital A/c 125,000
Bank A/c………………………………………..Dr 120,625
Calls in Arrear ………….……………………Dr (750+1000)X2.5 4375
To Equity Share First Call A/c 125,000
Equity Share Final Call A/c……………..Dr 125,000
To Equity Share Capital A/c 125,000
Bank A/c………………………………………..Dr 120625
Calls in Arrear ………….……………………Dr 4375
To Equity Share Final Call A/c 125,000
Equity Share Capital A/c……………….Dr (1750 X 10) 17,500
To Calls In Arrear [ WN 1] 11,000
To Share Forfeiture (WN 2) 6,500
(a)Bank A/c……………………………………..Dr (1750 X 8) 14,000
Share Forfeiture A/c……………………Dr 3500
To Equity Share Capital A/c 17,500

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Share Forfeiture A/c…………………..Dr 3000
To Capital Reserve (WN 3) 3000
(b)Bank A/c……………………………………..Dr (1500 X 9) 13,500
Share Forfeiture A/c……………………Dr 1,500
To Equity Share Capital A/c 15,000
Share Forfeiture A/c…………………..Dr 3750
To Capital Reserve(WN4) 3750

Working Note:
1.Calls in Arrear: Shivam- 750 x (3+5) = 6000
Rani- 1000 X 5 = 5000
11,000
2. Share Forfeiture: Shivam – 750 X 2 = 1500
Rani – 1000 X 5 = 5000
6500
3. Amount transferred to Capital Reserve: Shivam- 750 X (2-2) : 0
Rani – 1000 X (5-2): 3000
3000
Alternatively, When all the forfeited shares are reissued, then Shares Forfeited(Cr) less Shares
Forfeited(Dr) can be done. [6500 – 3500]
4. Amount transferred to Capital Reserve: Shivam- 750 X (2-1) : 750
Rani – 750 X (5-1): 3000
3750

Illustration 2
X Ltd. invited application for 10,000 shares of ₹ 100 each at par payable as follows.
On application. ₹ 25
On allotment. ₹ 40
On 1st and final call ₹ 35
The applications received for 9,000 shares and all of these were accepted. All money due were
received except the first and final call on 100 shares which were forfeited after doing all legal
formalities, 50 shares were re-issued @ ₹ 90 as fully paid up. Pass entries in the cash book and
journal of X Ltd.
[Ans. Amount of capital reserve ₹ 2,750.]

Illustration 3:
X Ltd. Made an issue of 10,000 equity shares of ₹ 15 each payable as follows:₹ 4 per share on
application;₹ 7 per share (including ₹ 2 per share as premium) on Allotment ; Rs 6 per share on
first and final call .
Arrear of instalments were as under : Mr. Das holding 50 shares failed to pay the Allotment and
Call money .
Mr. Pal holding 80 shares failed to pay the Call money .
All these shares were forfeited and subsequently issued to Mr. Roy as fully paid-up at a discount
of ₹ 3 per share .

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Pass journal entries (including cash transactions) to record the above issue, forfeiture and re-
issue of shares in books of the company.
[Ans. Amount received on Allotment ₹ 69,650; (on 9,950 shares) on call ₹ 59,220 (on 9,870
shares); Capital Reserve to be created ₹ 530.]

Illustration 4:The L & T Company Ltd. offered to public for subscription of 50,000 shares of $ 20 each at a
premium of $ 5 per share. The amount was payable as under:
On application $. 5 per share
On allotment $. 12 per share (Including premium of $ 5 per share)
On first call $ 4 per share
On Second and Final call $ 4 per share
Applications were received for all the shares. Allotment was made to all the applicants in full. Mr. A failed
to pay allotment and call money on 200 shares held by him. Mr. B was allotted 300 shares. He did not pay
the call money. Their shares were forfeited. Make necessary journal entry.
[Ans: Share Forfeiture – 4600, Calls in Arrear – A: 4000, B: 2400]

5. S ltd. offers 1,00,000 equity shares of Rs 10 payable Rs 3 on application, Rs 3 on allotment (including

premium Rs. 2) Rs. 4 on 1st call three months after allotment and Rs. 2 on final call three months after
1st call.

Applications were received for 1,58,500 shares and allotment was made as under:

Share allotted Allotment in full 19000 (Mr. D in full on allotment in respect of 4000 shares)

Allotment of 2/3 of shares applied for 80,000

Allotment of 1/2 of shares applied for 1,000

Application money of Rs. 52,500 in respect of 17,500 shares upon which no allotment was made was
returned to applicants. All amounts were received except final call on 100 shares which were forfeited
and re issued later on @ Rs 9 each. Interest on calls in advance is paid @12% p.a. Give necessary journal
entries and also show the items in the Balance Sheet.

6. AB Ltd. invited applications for 1,00,000, 12% Preference Shares of ₹100 each issued at a discount of
10%. The amount was payable as follows:

On Application 20

On Allotment 30

On First and Final Call balance

Applications for 1,50,000 shares were received. Applications for 30,000 shares were rejected and pro-
rata allotment was made to the remaining applicants. All calls were made and were duly received except

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the first and final call on 1,000 shares held by Kumar. His shares were forfeited. Out of the forfeited
shares 700 shares were re-issued at 120 per share fully paid up.

Pass necessary journal entries in the books of AB Ltd.

7. Newton Ltd. invited applications for 30,000 shares of 50 each. The public subscribed for 25,000 shares
and these were duly allotted.

The amount was payable as follows:

On application 10 per share

On allotment 25 per share

On first and final 15. per share.

All the money was duly received, with the exception of the call money on 400 shares. These shares were
forfeited. Of the forfeited shares, 300 shares were reissued as fully paid up @ 35 per share.

Journalise the above.

8. Aashutosh Ltd issued 10,000 equity shares of 100 each at 5% discount payable as to

30 on application; 35 on allotment and ₹30 on call.

Applications were received for 9,700 shares and full allotment was made One shareholder holding 300
shares failed to pay the allotment money and his shares were forfeited. Another shareholder holding
400 shares failed to pay call money and his shares were also forfeited. Later on all the forfeited 700
shares were reissued @ 80 per share as fully paid up

Prepare company's Cash Book and make Journal entries.

9. SHI Ltd issued 50,000 equity shares of $ 10 each at a premium of $ 2 per share payable as follows:
Application $ 3; Allotment $ 5(including premium); Balance in two equal calls.
Application were received for 75,000 shares and shares were issued on pro rata basis.

Case1: Sunil the holder of 1000 shares did not pay the allotment money and subsequently the call
money and Raju the holder of 600 shares did not pay the call money. Their shares were forfeited after
the final call and reissued at 8 per share.

Case 2: Swati who applied for 450 shares did not pay the allotment money and Muskan the holder of
300 shares did not pay the call money. These shares were forfeited after final call. 500 shares were
reissued to X at 9 per share(including all the shares of Swati).

Pass necessary journal entries for the above two cases separately.

Solution: Case 1

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Particulars Amount(Dr) Amount (Cr)
Bank Ac………………………………………….Dr (75K * 3) 225,000
To Equity Share Application A/c 225,000
Equity Share Application A/c………….Dr 225,000
To Equity Share Capital (50K*3) 150,000
To Equity Share Allotment (25K*3) 75,000
Equity Share Allotment A/c……………Dr 250,000
To Equity Share Capital (50K*3) 150,000
To Securities Premium Reserve (50K*2) 100,000
Bank A/c………………………………………..Dr 171,500
Calls in Arrear (WN 1) 3500
To Equity Share Allotment A/c (250,000 – 75,000) 175,000
Equity Share First Call A/c……………..Dr 100,000
To Equity Share Capital A/c 100,000
Bank A/c………………………………………..Dr 96, 800
Calls in Arrear (WN 2)……………………Dr 3200
To Equity Share First Call A/c 100,000
Equity Share Final Call A/c……………..Dr 100,000
To Equity Share Capital A/c 100,000
Bank A/c………………………………………..Dr 96,800
Calls in Arrear (WN 3)……………………Dr 3,200
To Equity Share Final Call A/c 100,000
Equity Share Capital A/c……………….Dr (1600 X 10) 16,000
Securities Premium A/c………………..Dr (1000 X 2) 2,000
To Calls In Arrear 9900
To Share Forfeiture (WN 4) 8100
Bank A/c……………………………………..Dr (1600 X 8) 12,800
Share Forfeiture A/c……………………Dr 3,200
To Equity Share Capital A/c 16,000
Share Forfeiture A/c…………………..Dr 4,900
To Capital Reserve (WN 5) 4,900

Working Note:
Shares Applied of Sunil:
Applied: Allotted:: Applied: Allotted
(Total) (Individually)
75,000 : 50,000 :: Applied: 1000
Applied = 75,000 X 1000 = 1500
50,000
Excess Shares : 1500-1000 : 500 shares
Excess Money : Excess Shares X Application Money
500 X 3 = 1500
1. Calls in Arrear: Allotment Due – Excess Money
1000 shares X $ 5 – $ 1500 = $ 3,500
2. Calls in Arrear for First Call
Sunil : 1000 X 2 = 2000

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Raju: 600 X 2 = 1200
3200
3. Calls in Arrear for Final Call = $ 3200
4. Share Forfeiture: (No. of Shares X Money Already Received per share) + Excess Money
Sunil: 1000 X 3 = 3000
Raju: 600 X (3 + 3) = 3600
Excess Money 1500
8100
5. Amount transferred to Capital Reserve: No of Shares Re-issued X (Money Already Received
per share – Discount on Re-issue) + Excess Money
Sunil: 1000 X (3-2) = 1000
Raju: 600 X (6-2) = 2400
Excess Money 1500
4900

Solution: Case 2
Particulars Amount(Dr) Amount (Cr)
Bank Ac………………………………………….Dr (75K * 3) 225,000
To Equity Share Application A/c 225,000
Equity Share Application A/c………….Dr 225,000
To Equity Share Capital (50K*3) 150,000
To Equity Share Allotment (25K*3) 75,000
Equity Share Allotment A/c……………Dr 250,000
To Equity Share Capital (50K*3) 150,000
To Securities Premium Reserve (50K*2) 100,000
Bank A/c………………………………………..Dr 173,950
Calls in Arrear (WN 1) 1050
To Equity Share Allotment A/c (250,000 – 75,000) 175,000
Equity Share First Call A/c……………..Dr 100,000
To Equity Share Capital A/c 100,000
Bank A/c………………………………………..Dr 98,400
Calls in Arrear (WN 2)……………………Dr 1600
To Equity Share First Call A/c 100,000
Equity Share Final Call A/c……………..Dr 100,000
To Equity Share Capital A/c 100,000
Bank A/c………………………………………..Dr 98,400
Calls in Arrear (WN 3)……………………Dr 1,600
To Equity Share Final Call A/c 100,000
Equity Share Capital A/c……………….Dr (800 X 10) 8000
Securities Premium A/c………………..Dr (300 X 2) 1600
To Calls In Arrear 4250
To Share Forfeiture (WN 4) 4350
Bank A/c……………………………………..Dr (800 X 9) 7200
Share Forfeiture A/c……………………Dr 800
To Equity Share Capital A/c 8000
Share Forfeiture A/c…………………..Dr 2050
To Capital Reserve (WN 5) 2050

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Working:
Shares Allotted of Swati= Applied: Allotted :: Applied: Allotted
= 75,000 : 50,000:: 450: Allotted
= 300 shares
Excess Shares = 450-300 = 150 Shares
Excess Money = 150 X 3 = 450
1. Calls in Arrear (Allotment) = Allotment Due – Excess Money
= 300 X 5 – 450
= 1050
2. Calls In Arrear (First Call)
Swati: 300 X 2 = 600
Muskan: 500 X 2=1000
1600
3. Calls in Final Call: 1600
4. Share Forfeiture: (No. of Shares forfeited X Money Already Received per share) + Excess Money
Swati: 300 X 3= 900
Muskan: 500 X 6= 3000
Excess Money 450
4350
5. Amount transfer to Capital Reserve: No. of shares reissued X (Money Already Received per share
– Discount on Re-issue) + Excess Money
Swati: 300 X (3-1)= 600
Muskan: 200 X (6-1) = 1000
Excess 450
2050

10: Dynamic Ltd. made a public issue of 15,000 equity shares of Rs 10 each at a premium of Rs 5 per
share payable as follows:

On application. Rs 5 per share(including Rs 2 as premium)

On allotment. Rs 6 per share (including the balance of premium)
On first call. Rs 2 per share.
On final call. The balance of issue price

Applications for received for 24,000 shares. No allotment was made to the applicants for 4,000 shares
and their application money were refunded along with letters of regret. Pro-rata allotment was made to
the applicants for 20,000 shares. Mr. A who had applied for 120 shares failed to pay allotment and both
the call moneys. Mr. B who was allotted 60 shares failed to pay to calls. Shares of Mr. A and B were
forfeited after the final call was made. All the forfeited shares were re-issued to Mr. C on payment of Rs
12 per share.

Show the journal entries in the books of Dynamic Ltd. To give effect to the above and also prepare a
bank account.

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[Ans. Amount transferred to Capital Reserve Rs 780; Per share adjustment Rs 1.67; Amount received on
allotment Rs 64,610.]

11:X Ltd. Offered 10,000 equity shares of Rs 10 each for subscription at a premium of Rs 2 per share
payable as follows:

On application. Rs 2
On allotment. Rs 5 (including premium)
On first call. Rs 2
On final call. Rs 3

The company received applications for 15,000 shares and allotment was made pro-rata to the applicants
of 12,000 shares, the remaining applications being refused. The excess application money was adjusted
on account of sums due on allotment.

Kapil to whom 500 shares were allotted failed to pay the allotment money and on his subsequent failure
to pay the first call money his shares were forfeited. Srinath who originally applied for 250 shares fail to
pay the two calls and his shares were forfeited after the final call.

Subsequently out of these forfeited shares 600 shares (including all shares of Kapil) were re-issued to
Sharma as fully paid up at Rs 9 per share.

Show the cash book, the journal entries and the balance sheet of the company to give effect to the
above.

[Ans. Amount received on allotment Rs 43,700, on 1st call Rs 18,584 and on Final call Rs 27,876; Capital
Reserve created Rs 1,100; Balance of Share forfeiture a/c Rs 540; Balance of cash Rs 1,19,560; Total of
balance sheet Rs 1,19,560.]

12:A Company issued for public subscription 40,000 equity shares of Rs. 10 each at a premium of Rs. 2
per share payable as under:

On application Rs. 2 per share

On Allotment Rs. 5 per share (including premium)

On first call Rs. 2 per share

On final call Rs. 3 per share

Applications were received for 70,000 Shares. Allotment was made pro-rata to the applicants for 50,000
shares, the remaining applications being refused. Money overpaid on applications was applied towards
sum due on allotment. A, to whom, 1,500 shares were allotted, failed to pay the allotment and call
money. B, to whom 2,000 shares were allotted, failed to pay the two calls. The shares of A and B were
subsequently forfeited after the second call was made. 3,000 of the forfeited shares were reissued @
Rs. 8 per share fully paid. The reissued shares included all of A’s shares. Pass journal entries in the books
of the company to record the above transactions.

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[Answer: Calls in Arrear: Allotment-6750, First Call- 7000, Final Call- 10,500. Share Forfeited 13,750.
Capital reserve: 5250, Excess Money: 750]

13: Prakash Engineering Company issued for public subscription 40,000 Equity shares of Rs 10 each at a
premium of Rs 2 per share, payable as: on application Rs 2 per share on allotment Rs 5 per share
(including premium) on first call Rs 2 per share on final call Rs 3 per share

Applications were received for 75,000 Equity Shares. The shares were allotted on pro-rata basis to the
applicants of 60,000 shares only, remaining applications being rejected. Money overpaid on an
application was utilised towards the sum due on allotment.

Ashok to whom 3,000 shares were allotted failed to pay the allotment money and the two calls. Baneet
who applied for 3,000 shares paid the calls money along with allotment money. Pass journal entries to
record the above transactions.

[Answer: Excess Money for Ashok: 3000, Calls in Advance for Baneet (2000 X 5): 10,000]

14: Petromax Ltd. issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as Rs 3 on
an application, Rs 5 including premium on an allotment and the balance in equal installments over two
calls. Applications were received for 92,000 shares and the allotment was done as under:

A. Applicants of 40,000 shares - Allotted 30,000 Shares

B. Applicants of 40,000 shares - Allotted 20,000 Shares

C. Applicants of 12,000 shares - Nil

Suresh, who had applied for 2,000 shares (Category A) did not pay any money other than application
money.

Chander, who was allotted 800 shares (Category B) paid the call money due along with allotment.

All other allottees paid their dues as per schedule. Pass necessary Journal entries in the books of
Petromax Ltd. to record the above

[Answer: Calls in Arrear: Allotment-6000, First Call-3000, Final Call-3000. Calls in Advance: 3200,
Excess Money: 1500, Amount received on Allotment: 154,000]

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