Mohit Glass Ltd. issued 20,000 shares of Rs.100 each at Rs.110 per share, payable Rs.30 on application, Rs.40 on allotment (including Premium), Rs.20 on first call and Rs.20 on final call. The applications were received for 24,000 shares and allotted 20,000 shares and rejected 4,000 shares and amount returned thereon. The money was duly received. Give journal entries.
Journal Entries in the books of Mohit Glass Ltd.
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|---|---|
| 1 | Bank A/c Dr. | 7,20,000 | ||
| To Share Application A/c | 7,20,000 | |||
| (Being application money received on 24,000 shares @ Rs.30 per share) |
| 2 | Share Application A/c Dr. | | 7,20,000 | | | | To Share Capital A/c | | | 6,00,000 | | | To Bank A/c | | | 1,20,000 | | | (Being application money transferred to share capital for 20,000 shares and refund made for 4,000 rejected shares) | | | |
| 3 | Share Allotment A/c Dr. | | 8,00,000 | | | | To Share Capital A/c | | | 6,00,000 | | | To Securities Premium A/c | | | 2,00,000 | | | (Being allotment money due on 20,000 shares @ Rs.40 per share including premium of Rs.10) | | | |
| 4 | Bank A/c Dr. | | 8,00,000 | | | | To Share Allotment A/c | | | 8,00,000 | | | (Being allotment money received in full) | | | |
| 5 | Share First Call A/c Dr. | | 4,00,000 | | | | To Share Capital A/c | | | 4,00,000 | | | (Being first call money due on 20,000 shares @ Rs.20 per share) | | | |
| 6 | Bank A/c Dr. | | 4,00,000 | | | | To Share First Call A/c | | | 4,00,000 | | | (Being first call money received in full) | | | |
| 7 | Share Final Call A/c Dr. | | 4,00,000 | | | | To Share Capital A/c | | | 4,00,000 | | | (Being final call money due on 20,000 shares @ Rs.20 per share) | | | |
| 8 | Bank A/c Dr. | | 4,00,000 | | | | To Share Final Call A/c | | | 4,00,000 | | | (Being final call money received in full) | | | |
Explanation
This question tests the student's understanding of share issue at premium with oversubscription. The key points are: (1) Shares were issued at Rs.110 (face value Rs.100 + premium Rs.10), (2) Applications received for 24,000 shares but only 20,000 were allotted, (3) Excess application money on 4,000 shares was refunded, (4) Premium of Rs.10 per share is included in allotment money and credited to Securities Premium Account. The total share capital collected is Rs.20,00,000 (20,000 × Rs.100) and securities premium is Rs.2,00,000 (20,000 × Rs.10).
Solution Steps
Step 1: Calculate application money received: 24,000 shares × Rs.30 = Rs.7,20,000
Step 2: Transfer application money to Share Capital for allotted shares: 20,000 × Rs.30 = Rs.6,00,000
Step 3: Refund application money for rejected shares: 4,000 × Rs.30 = Rs.1,20,000
Step 4: Calculate allotment money due: 20,000 × Rs.40 = Rs.8,00,000 (Share Capital Rs.,000 = Rs.6,00,000; Premium Rs.,000 = Rs.2,00,000)
Step 5: Calculate first call: 20,000 × Rs.20 = Rs.4,00,000
Step 6: Calculate final call: 20,000 × Rs.20 = Rs.4,00,000