Milind and Co. Ltd. Issued 20,000 equity shares of Rs. 100 each payable as under: [10]

Issue of Equity Shares: A Case Study of Milind and Co. Ltd.

Milind and Co. Ltd. issued 20,000 equity shares of Rs. 100 each, with payments structured as follows:

• On Application: Rs. 20 per share
• On Allotment: Rs. 35 per share
• On First Call: Rs. 25 per share
• On Second & Final Call: Rs. 20 per share

The company received applications for 30,000 equity shares. The directors decided to fully allot shares to 20,000 applicants and reject the remaining 10,000 applications, refunding their money in full.

All due amounts on allotment and calls were received promptly. The expenses related to the share issue amounted to Rs. 5,000.

Required: Pass the necessary journal entries in the books of Milind and Co. Ltd. to record these transactions.

Solution: Journal Entries in the Books of Milind and Co. Ltd.

#	Particulars	L.F.	Debit (Rs.)	Credit (Rs.)
1	Bank A/c ……….. Dr.		600,000
	To Equity Share Application A/c			600,000
	[Being application money received on 30,000 shares @ Rs. 20 per share]
2	Equity Share Application A/c ……….. Dr.		600,000
	To Equity Share Capital A/c			400,000
	To Bank A/c			200,000
	[Being application money on 20,000 shares transferred to share capital, and excess on 10,000 shares refunded]
3	Equity Share Allotment A/c ……….. Dr.		700,000
	To Equity Share Capital A/c			700,000
	[Being allotment money due on 20,000 shares @ Rs. 35 per share]
4	Bank A/c ……….. Dr.		700,000
	To Equity Share Allotment A/c			700,000
	[Being allotment money received in full]
5	Equity Share First Call A/c ……….. Dr.		500,000
	To Equity Share Capital A/c			500,000
	[Being first call money due on 20,000 shares @ Rs. 25 per share]
6	Bank A/c ……….. Dr.		500,000
	To Equity Share First Call A/c			500,000
	[Being first call money received in full]
7	Equity Share Second & Final Call A/c ……….. Dr.		400,000
	To Equity Share Capital A/c			400,000
	[Being second & final call money due on 20,000 shares @ Rs. 20 per share]
8	Bank A/c ……….. Dr.		400,000
	To Equity Share Second & Final Call A/c			400,000
	[Being second & final call money received in full]
9	Expenses on Issue of Shares A/c ……….. Dr.		5,000
	To Bank A/c			5,000
	[Being expenses incurred on the issue of shares paid]

Working Notes (Calculations)

1. Application Money:
   • Received: 30,000 shares × Rs. 20 = Rs. 600,000
   • Transferred to Capital: 20,000 shares × Rs. 20 = Rs. 400,000
   • Refunded: 10,000 shares × Rs. 20 = Rs. 200,000
2. Allotment Money Due & Received:
   • 20,000 shares × Rs. 35 = Rs. 700,000
3. First Call Money Due & Received:
   • 20,000 shares × Rs. 25 = Rs. 500,000
4. Second & Final Call Money Due & Received:
   • 20,000 shares × Rs. 20 = Rs. 400,000

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