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

On Application Rs. 20 per share.
On Allotment Rs. 35 per share.
On First Call Rs. 25 per share.
On Second call Rs. 20 per share.
The Company received applications for 30,000 equity shares. Applications for 20,000 shares were accepted and allotted shares. Applications for 10,000 shares were rejected and refunded in full.
The money due on allotment and both the calls was received in full.
The expenses of issue amounted to Rs. 5000.
Pass necessary journal entries in the books of the company.
Solution: Journal Entries In the Books Milind and Co. Ltd.
Date
Particulars
L.F.
Debit
Credit
1
Bank A/c ……….Dr.

600000


To Equity Share Application A/c


600000

[Being application money received]



2
Equity Share Application A/c ……….Dr.

400000


To Equity Share Capital A/c


400000

[Being application money transferred to share capital A/c



3
Equity Share Application A/c ……….Dr.

200000


To Bank A/c


200000

[Being excess application money refunded]



4
Equity Share Allotment A/c ……….Dr.

700000


To Equity Share Capital A/c


700000

[Being allotment money due from shareholders]



5
Bank A/c ……….Dr.

700000


To Equity Share Allotment A/c


700000

[Being allotment money received]



6
Equity Share First Call A/c ……….Dr.

500000


To Equity Share Capital A/c


500000

[Being First call money due from shareholders]



7
Bank A/c ……….Dr.

500000


To Equity Share First Call A/c


500000

[Being equity share First Call money received from shareholders]



8
Equity share second call A/c ……….Dr.

400000


To Equity Share Capital A/c


400000

[Being Second call money due from equity shareholders]



9
Bank A/c ……….Dr.

400000


To Equity Share Second Call A/c


400000

[Being Second call money received from shareholders]



10
Expenses of Issue A/c ……….Dr.

5000


To Bank A/c


5000

[Being expenses of issue paid]



Working Note:
1. Calculation of Application money refunded to Share applicants.
Application money received from public
(30000 × 20)   = 600000
Less: Application money transferred to share capital
(20000 × 20)  = 400000
Excess application money refunded = 600000 – 400000 = 200000
2. Allotment money received (20000 × 35) = 7,00,000
3. First Call money received (20000 × 25) = 5,00,000

4. Second Call Money received (20,000 × 20) = 4,00,000