ILLUSTRATION 70. KS Ltd. invited applications for issuing 1,60,000 equity shares of 10 each at a premium of 76 per On Application On Allotment On First and Final Call Applications for 3,20,000 shares were received. Applications for 80,000 shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Jain holding 800 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the final call was made. Gupta who had applied for 1,200 shares failed to pay the final call. These shares were also forfeited. Out of the forfeited shares 1,000 shares were re-issued at 78 per share fully paid up. The re-issued shares included all the forfeited shares of Jain. share. The amount was payable as follows : 74 per share (including premium 1 per share) 76 per share (including premium 73 per share) Balance. - Assuming that the Company maintains Calls in Arrears Account, pass necessary Journal entries for the above transactions in the books of KS Ltd. (C.B.S.E. 2016, Delhi)

ILLUSTRATION 70. KS Ltd. invited applications for issuing 1,60,000 equity shares of 10 each at a premium of 76 per On Application On Allotment On First and Final Call Applications for 3,20,000 shares were received. Applications for 80,000 shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Jain holding 800 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the final call was made. Gupta who had applied for 1,200 shares failed to pay the final call. These shares were also forfeited. Out of the forfeited shares 1,000 shares were re-issued at 78 per share fully paid up. The re-issued shares included all the forfeited shares of Jain. share. The amount was payable as follows : 74 per share (including premium 1 per share) 76 per share (including premium 73 per share) Balance. - Assuming that the Company maintains Calls in Arrears Account, pass necessary Journal entries for the above transactions in the books of KS Ltd. (C.B.S.E. 2016, Delhi)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Less : Excess amount received on application
Allotment
600
6,00,000
3,00,000
3,00,000
%3D
%3D
Balance Due
Less: Amount not received from Subodh on Allotment
Net amount received on allotment in Cash
600
2,99,400
(reces excess of 600 is exclusively for share capital and hence Securities Premium Reserve
ILLUSTRATION 70.
KS Ltd. invited applications for issuing 1,60,000 equity shares of 10 each at a
premium of 76 per share. The amount was payable as follows :
On Application
On Allotment
On First and Final Call
Applications for 3,20,000 shares were received. Applications for 80,000 shares
were rejected and application money refunded. Shares were allotted on pro-rata basis
to the remaining applicants. Excess money received with applications was adjusted
towards sums due on allotment. Jain holding 800 shares, failed to pay the allotment
money. His shares were forfeited immediately after allotment. Afterwards the final
call was made. Gupta who had applied for 1,200 shares failed to pay the final call.
These shares were also forfeited. Out of the forfeited shares 1,000 shares were
Te-1ssued at 78 per share fully paid up. The re-issued shares included all the forfeited
shares of Jain.
4 per share (including premium 1 per share)
76 per share (including premium 73 per share)
Balance.
Assuming that the Company maintains Calls in Arrears Account, pass necessary
Journal entries for the above transactions in the books of KS Ltd.
(C.B.S.E. 2016, Delhi)
SOLUTION:
JOURNAL OF KS LTD.
Cr
Date
L.F.
Dr
Particulars
Amount
Amount
12,80,000
Dr.
Bank A/c (3,20,000 x 4)

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