4.

61 Corporate Accounting

ofshares-Refund of excess applications-Forfe

31: Pro-rata Allotment-Grouping Forfeiney
Illustratiop
&Re-iose of shares
of 10 each at a premium of2 pershare n
for 20,000 equity shares
Novel Ltd. invited applications
and the balance on hrst and hnal call. Applict
R7 on allotment including premium
3 on application,
ications

tor 25,000 shares were received. It was decided:

to refuse allotmentto the applicants

of 1,000 shares;
(a)
to allot in full to the applicants for 4,000 shares;

(c)to allot the balance of the available shares on pro-rata basis among the other applicants;and

(d) to utilize the excess application money in part payment of allotment money.
Mr. Sujan,holding 200 shares, to whom shares had been allotted on pro-rata basis failed to pay theamount
due on allotmentand call. Mr. Bijan, holding 100 shares, to whom full allotment was made failed to pay
the amount due on call only. These shares were forfeited. 160 forfeited shares ofMr. Sujan and 50forfeited
were re-issued at R9 per share to Mr. Anjan.
shares of Mr. Bijan
Show the necessary journal entries of the above transactions in the books of the company.
IC.U. B.Com (H)2018; C.U. B.Com (H)2003]
Similar Question
Solution: Books of Novel Ltd.

Journal Dr. Cr.

Date Particulars
Bank A/c
To Equity
Dr. 75,000
Share Application A/c
[25,000x3]
75,000
(Being application money received on 25,000shares @3 per share)
Equity Share Application A/c
To Equity Share Capital A/c Dr. 75,000
[20,000 x 3]
To Bank A/c [WN: 3] 60,000
To Equity Share Allotment A/c 3,000
[WN: 3]
(Being application money on 20,000 shares transferred to 12,000
Share Capital A/c,
money received on 4,000 sharesrefunded and balance
adjusted with allotment, as
per Board's Resolution
No...dated...)
Equity ShareAllotment A/c
[20,000x7]
To Equity Share Dr.
Capital A/c [20,000 x 1,40,000
To Securities PremiumA/c (7-2)1
[20,000 x 2] 1,00,000
(Being allotment money @7,
including premium of
T2,per share dueon 20,000 40,000
shares, as per Board's Resolution No... dated...)
Bank A/c
Calls-in-ArrearA/c
To Equity
Dr. 1,26,750
Share Allotment A/c Dr 1,250
(Beingallotment money 1,28,000
received on all shares 200 shares
Equity Share First &Final
except WN: 5)
To Equity Share Call A/c [20,000x2]
Capital A/c . Dr. 40,000
(Being first &final call
money of aR2 per share due on 20,000
40,000
Board's Resolution shares, asper
No.....dated...)
Bank A/c
Calls-in-Arrear A/c Dr 39,400
ToEquity Share First&Final Call Dr. 600
A/c
(Beingfirst &final callmaney received
on all shares except 300
sharesWN 1 40,000
 Shares 4.62
for Issue of
Accounting

Equity Share Capital A/c

[300 x 101 3,000
Securities Premium A/e Dr
[200 x 21 400
To Calls-in-Arrear
To Forfeited Shares
Ae [1,250
(WN:5)+ 600 (WN:
Dr 1,850
Alc 6)]
(Being 200 shares 1,550
forfeited for
money and 100 shares non-payment of allotment and first & hnal
forfeited for ca
non-payment of call money, as s
Resolution No... dated per Board
Bank A/c {160+ 50)x
9]
Forfeited Shares A/c
[(160+ 50)x 11 Dr 1,890
To Equity Share
Capital A/c[(160+50) x Dr 210
(Being 210 shares re-185ued 101
(a 9 per share, 2,100
asper Board's
ForfeitedShares Resolution No...dated
A/c
To Capital Reserve 790
A/c Dr.

(Being profit on re-1sSueof forfeited 790

shares transferred
wORKING NOTES:
to
Capital
Reserve-WN: 7)
1.Split-up of
issue price per share |Fig.in
Appl. Allot. Call
5.Calls-in-Arrear and amount received on allotment & call
Total
Particulars
Share capital 2 10
LEullallot made
Allotment Call

Securities premium
Amount receivable 28,000 8,000
Total 12

Due forcapital onAllot=(7-2) 5 Calls-in-Arrear

14,000x 7] [4,000x 21

200

Due for capital

on Allot on Call-
(10-3-5)= 2 Amountreceived 8,000
100 x 21
7,800
2.Pro-rata allot. made
2.No.of excess share applications Amount receivable 1,00,000 32,000
No. of No.of No. of
td6,000x7)-12,0001 16,000x 21
Categories Shares Shares Excess OCalls-in-Arrear 1,250 400
applied alloted Applications [1,00,000x 200/ 16,000 200x21
(1) (2) 1-2) Amountreceived 98,750 31,600

Applications rejected 1,000 1,000 [1+2]

Total Calls-in-Arrear 1,250 600

Full allotment made 1.26,750

4,000 4,000 Totalamt received [1+2] 39,400

Allated
on pro-ata basis
20,000 16,000 4,000 6.Profit on re-issue of150forfeited shares 1Fig, in ]
Total
25,000 20,000 5,000 Amount forfeited on re-issued shares
3.Pro-rata allotment & Refund Shares
of pro-rata
allot. (160 shares of Sujan)

Excess applications received for pro-rata allot. 4,000 Application money [160x 31 480

Excess applications money received for Excess appl, money [12,000x 160/ 16,000] 120

pro-rata allotment 14,000 x 31 R12,000 Shares of full

allot. of 50 shares of Bijan [50 x 8 400
1,000
Exccss appl money per sh [12,000/16,000] 0.75

ExCess applications muney refund on 1,000shares -Amount used inre-issue [(160 +50)x i 210
Profit on Re-issue 790
.000x3)
3,000
4.Calle-in-Arrear during allotment & eall No. of shares|
Allotment Call NB Since, excess application money per share (R0.75) <Amount
Shareboiders
due (capital portion)
on allotment (5), it implies on failure of
Pho-raca allorment made money by the shareholderts, the premium money du

Mt. Sujan 200 200 allotnient

allotnent remains uncolected Se, on subsequent furfeiture o

100 on
Pul made [Mt.Bijan) the cntire Securities Premium (ueon allotnent) per
allotnent
theseshares,
Total 200 300shares has to be cancelled.