CBSE 2025, Compartment, Set 1

Question

Hira Ltd. invited applications for issuing 1,00,000 equity shares of ₹10 each at 10% premium. The amount was payable as follows:
On Application - ₹3 per share
On Allotment - ₹3 per share (including premium)
On first and final call - Balance amount

Applications were received for 1,40,000 shares and shares were allotted on a pro-rata basis to all the applicants. The excess money received on application was adjusted towards sums due on allotment. All the shareholders paid the allotment money due except one shareholder who was allotted 1,000 shares. These shares were forfeited immediately. All these shares were reissued to Shashi as ₹5 paid up for ₹4 per share. First and final call has not been made.
Pass necessary journal entries in the books of Hira Ltd. Open Calls-in-Arrears Account wherever required.

Edvaya · Accepted Answer

The correct answer is Subjective. **Journal Entries in the books of Hira Ltd.** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | (i) | Bank A/c Dr. To Equity Share Application A/c *(Application money received on 1,40,000 shares @ ₹3)* | | 4,20,000 | 4,20,000 | | (ii) | Equity Share Application A/c Dr. To Equity Share Capital A/c ($1,00,000 	imes 3$) To Equity Share Allotment A/c *(Application money transferred and excess adjusted)* | | 4,20,000 | 3,00,000 1,20,000 | | (iii)| Equity Share Allotment A/c Dr. To Equity Share Capital A/c ($1,00,000 	imes 2$) To Securities Premium A/c ($1,00,000 	imes 1$) *(Allotment money due on 1,00,000 shares @ ₹3)* | | 3,00,000 | 2,00,000 1,00,000 | | (iv) | Bank A/c Dr. Calls-in-Arrears A/c Dr. To Equity Share Allotment A/c *(Allotment money received)* | | 1,78,200 1,800 | 1,80,000 | | (v) | Equity Share Capital A/c Dr. ($1,000 	imes 5$) Securities Premium A/c Dr. ($1,000 	imes 1$) To Share Forfeiture A/c To Calls-in-Arrears A/c *(1,000 shares forfeited)* | | 5,000 1,000 | 4,200 1,800 | | (vi) | Bank A/c Dr. ($1,000 	imes 4$) Share Forfeiture A/c Dr. ($1,000 	imes 1$) To Equity Share Capital A/c ($1,000 	imes 5$) *(Reissue of 1,000 shares at ₹4 per share, ₹5 paid up)* | | 4,000 1,000 | 5,000 | | (vii)| Share Forfeiture A/c Dr. To Capital Reserve A/c *(Gain on reissue transferred)* | | 3,200 | 3,200 | **Working Notes:** 1. Pro-rata ratio = 1,40,000 applied : 1,00,000 allotted = 7:5. Defaulter allotted 1,000 shares. Applied = $1,000 	imes 7/5 = 1,400$ shares. Excess app money = $(1,400 - 1,000) 	imes 3 = ₹1,200$. 2. Allotment due from defaulter = $1,000 	imes 3 = ₹3,000$. Calls in Arrears = $3,000 - 1,200 = ₹1,800$. 3. Total allotment received = $3,00,000 	ext{ (due)} - 1,20,000 	ext{ (adjusted)} - 1,800 	ext{ (arrears)} = ₹1,78,200$. 4. Since the excess app money (₹1,200) does not fully cover the share capital portion of allotment (₹2,000), the premium of ₹1,000 remains unpaid and is debited on forfeiture.

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