OMTEX AD 2

Khandelwal Co. Ltd. made an issue of 40,000 equity shares of Rs. 20 each, payable as follows:

Khandelwal Co. Ltd. Issue of Shares - Solved Problem
HSC Board Exam Papers Solution March 2014: Khandelwal Co. Ltd. made an issue of 40,000 equity shares of Rs. 20 each, payable as follows:

Problem Statement

Khandelwal Co. Ltd. made an issue of 40,000 Equity Shares of Rs. 20 each, payable as follows:

  • Application: Rs. 5 per share
  • Allotment: Rs. 10 per share
  • First Call: Rs. 3 per share
  • Second and Final Call: Rs. 2 per share

The company received applications for 45,000 shares of which applications for 5,000 shares were rejected and the money refunded. All the shareholders paid upto second call except Sachin, the allotee of 2,000 shares, failed to pay Final Call.

Pass Journal Entries for the above transactions in the books of Khandelwal Co. Ltd.

Solution: Journal Entries

In the books of Khandelwal Co. Ltd.

Journal Entries

Date Particulars L.F. Debit (Rs.) Credit (Rs.)
1. Bank A/c ...Dr.
    To Equity Share Application A/c (Being application money received on 45,000 shares @ Rs. 5 per share) 		2,25,000
2,25,000
2. Equity Share Application A/c ...Dr.
    To Equity Share Capital A/c
    To Bank A/c (Being application money on 40,000 shares transferred to share capital and excess money on 5,000 shares refunded) 		2,25,000
2,00,000
25,000
3. Equity Share Allotment A/c ...Dr.
    To Equity Share Capital A/c (Being allotment money on 40,000 shares @ Rs. 10 per share due) 		4,00,000
4,00,000
4. Bank A/c ...Dr.
    To Equity Share Allotment A/c (Being allotment money received) 		4,00,000
4,00,000
5. Equity Share First Call A/c ...Dr.
    To Equity Share Capital A/c (Being first call money on 40,000 shares @ Rs. 3 per share due) 		1,20,000
1,20,000
6. Bank A/c ...Dr.
    To Equity Share First Call A/c (Being first call money received) 		1,20,000
1,20,000
7. Equity Share Second & Final Call A/c ...Dr.
    To Equity Share Capital A/c (Being second & final call money on 40,000 shares @ Rs. 2 per share due) 		80,000
80,000
8. Bank A/c ...Dr.
Calls in Arrears A/c ...Dr.
    To Equity Share Second & Final Call A/c (Being final call money received on 38,000 shares, Sachin failed to pay on 2,000 shares) 		76,000
4,000
80,000
Working Note for Final Call:
Total Due: 40,000 shares × Rs. 2 = Rs. 80,000
Less: Calls in Arrears (Sachin): 2,000 shares × Rs. 2 = Rs. 4,000
Amount Received by Bank: Rs. 76,000

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