The Adarsh Control Device Ltd. was registered with the authorised capital of Rs.3,00,000 divided into 30,000 shares of Rs.10 each, which were offered to the public. Amount payable as Rs.3 per share on application, Rs.4 per share on allotment and Rs.3 per share on first and final call. These shares were fully subscribed and all money was duly received. Prepare journal and Cash Book.
JOURNAL ENTRIES IN THE BOOKS OF ADARSH CONTROL DEVICE LTD.
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|---|
| Bank A/c Dr. | 90,000 | |||
| To Share Application A/c | 90,000 | |||
| (Being application money received on 30,000 shares @ Rs.3 per share) | ||||
| Share Application A/c Dr. | 90,000 | |||
| To Share Capital A/c | 90,000 | |||
| (Being application money transferred to Share Capital) | ||||
| Share Allotment A/c Dr. | 1,20,000 | |||
| To Share Capital A/c | 1,20,000 | |||
| (Being allotment money due on 30,000 shares @ Rs.4 per share) | ||||
| Bank A/c Dr. | 1,20,000 | |||
| To Share Allotment A/c | 1,20,000 | |||
| (Being allotment money received) | ||||
| Share First and Final Call A/c Dr. | 90,000 | |||
| To Share Capital A/c | 90,000 | |||
| (Being first and final call money due @ Rs.3 per share) | ||||
| Bank A/c Dr. | 90,000 | |||
| To Share First and Final Call A/c | 90,000 | |||
| (Being call money received) |
CASH BOOK (BANK COLUMN ONLY)
| Date | Particulars | L.F. | Amount (Rs.) | Date | Particulars | L.F. | Amount (Rs.) |
|---|---|---|---|---|---|---|---|
| Share Application A/c | 90,000 | Balance c/d | 3,00,000 | ||||
| Share Allotment A/c | 1,20,000 | ||||||
| Share First and Final Call A/c | 90,000 | ||||||
| 3,00,000 | 3,00,000 | ||||||
| Balance b/d | 3,00,000 |
Explanation
This is a straightforward share capital problem where shares are fully subscribed and all money is duly received. The authorised capital is Rs. 3,00,000 divided into 30,000 shares of Rs. 10 each. The amount is payable in three instalments: Rs. 3 on application, Rs. 4 on allotment, and Rs. 3 on first and final call. Since all shares were subscribed and all money received, there are no complications like oversubscription or calls-in-arrears. The total of all instalments (Rs. 3 + Rs. 4 + Rs. 3 = Rs. 10) equals the face value of the share, so there is no premium or discount involved.
Solution Steps
Step 1: Calculate application money received = 30,000 shares × Rs. 3 = Rs. 90,000
Step 2: Calculate allotment money due = 30,000 shares × Rs. 4 = Rs. 1,20,000
Step 3: Calculate first and final call money due = 30,000 shares × Rs. 3 = Rs. 90,000
Step 4: Pass journal entries for receipt of application money, transfer to share capital, allotment due and received, call due and received
Step 5: Prepare Cash Book showing total receipts of Rs. 3,00,000 (90,000 + 1,20,000 + 90,000)