ABC limited issued 1000 shares of rupees 10 each to Ram at a premium of Rs 5 per share .Ramhad paid rupees 3 per share on application and Rs 8( including premium )on allotment butcould not pay rupees 2 on first call and rupees 2 on final call. The director forfeited his sharesand reissued to Jaggu as rupees 8 for fully paid. pass necessary journal entries
Question
ABC limited issued 1000 shares of rupees 10 each to Ram at a premium of Rs 5 per share .Ramhad paid rupees 3 per share on application and Rs 8( including premium )on allotment butcould not pay rupees 2 on first call and rupees 2 on final call. The director forfeited his sharesand reissued to Jaggu as rupees 8 for fully paid. pass necessary journal entries
Solution
Here are the necessary journal entries:
-
When shares are issued to Ram:
Bank A/C Dr. 3000 (1000 shares * Rs 3 per share)
To Share Application A/C 3000
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When allotment is made:
Share Application A/C Dr. 3000
Ram A/C Dr. 5000 (1000 shares * Rs 5 per share)
To Share Capital A/C 8000 (1000 shares * Rs 8 per share)
To Securities Premium A/C 2000 (1000 shares * Rs 2 per share)
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When Ram fails to pay the first call:
Ram A/C Dr. 2000 (1000 shares * Rs 2 per share)
To Share First Call A/C 2000
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When Ram fails to pay the final call:
Ram A/C Dr. 2000 (1000 shares * Rs 2 per share)
To Share Final Call A/C 2000
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When shares are forfeited:
Share Capital A/C Dr. 8000 (1000 shares * Rs 8 per share)
Securities Premium A/C Dr. 2000 (1000 shares * Rs 2 per share)
To Ram A/C 10000 (1000 shares * Rs 10 per share)
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When shares are reissued to Jaggu:
Bank A/C Dr. 8000 (1000 shares * Rs 8 per share)
To Share Capital A/C 8000
Please note that the above entries are made assuming that the company follows the practice of maintaining a Securities Premium Account. If the company does not maintain such an account, the premium received on allotment would be credited to the Share Capital Account.
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