7. Wipro Ltd. issued 10,000 equity shares of ₹ 50 each.

Applications were received for 15,000 shares

out of which 2000 shares were rejected and application money refunded. The remaining 3000 shares
application money adjusted towards allotment.

The amount is collected as follows:

With Application ₹ 25

On Allotment ₹ 15

On First and Final Call ₹ 10

All the calls were made and amount were received except one shareholder who failed to pay First
and final call money on 200 shares after sending the reminder the board of director passed a
resolution to forfeit these shares.

Pass the necessary journal entries in the books of the company.

Workings

1. Application money received = 15,000 X 25 = 3,75,000

2. Application money transferred

a) Refunded = 2000 X 25 = 50,000

b) Adjusted to allotment = 3000 X 25 = 75,000
c) Transfer to share capital = 10,000 X 25 = 2,50,000
3,75,000

3. Allotment money due = 10,000 X 15 = 1,50,000

4. Allotment money received (1,50,000 – 75,000) = 75,000

5. First and final call money due = 10,000 X 10 = 1,00,000

6. First and Final call money received:

Due 1,00,000
Less:- Calls in arrears (200 X 10) (2000)
98,000

Forfeiture of shares
Cancellation of shareholders name from register of company due to non – payment of first
and final call money on 200 shares.

Points to remember
1. Amount received on shares = 200 X 40 = 8000
2. Amount not received on shares = 200 X 10 = 2000
3. Total Share Capital of forfeited shares = 200 X 50 = 10,000
 In the books of Wipro Ltd.

Journal

Sr. No. Particulars L.F Debit ₹ Credit ₹

1 Application money received

Bank A/c----------------------------------Dr 3,75,000 -

To Equity share application money A/c - 3,75,000
(Being application money received on 15,000 equity
shares at ₹ 25 per share)
2 Application money refunded (2000), adjusted towards
allotment (3000) and transferred to share capital (10,000)

Equity share application money A/c-------Dr 3,75,000 -

To Bank A/c (2000 X 25) - 50,000
To Share allotment A/c (3000X25) - 75,000
To Equity share capital A/c (10,000 X 25) - 2,50,000
(Being application money refunded, adjusted and
transferred to share capital A/c at ₹ 25 each)
3 Allotment money due

Equity share allotment A/c-------Dr 1,50,000 -

To Equity share capital A/c - 1,50,000
(Being allotment money due on 10,000 shares at ₹ 15 per
share)
4 Allotment money received after adjusting application
money

Bank A/c------------------------------------------Dr 75,000 -

To Equity share allotment A/c - 75,000
(Being allotment money received after adjusting
application money on 3000 shares)
5 First and Final call money due

Equity share first and final call A/c--------------------Dr 1,00,000 -

To Equity Share Capital A/c - 1,00,000
(Being first and final call money due on 10,000 shares at ₹
10 per share)
6 First and Final call money received except 200 shares
Bank A/c-------------------------------------------------Dr 98,000 -
Calls in arrears A/c------------------------------------Dr 2000 -
To Equity share first and final call A/c - 1,00,000
(Being first and final call money received except on 200
shares)
7 Forfeiture of 200 shares
Equity share Capital A/c---------------------------Dr (200 x 50) 10,000 -
To Calls in arrears (200x 10) - 2,000
To Share forfeiture A/c (200x 40) - 8,000
(Being forfeiture of 200 shares for non-payment of first
and final call money)
11,85,000 11,85,000