Question

Suhas Limited issued 10,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable ₹ 3 on application, ₹ 5 (including premium) on the allotment, and the balance in two calls of an equal amount. Applications were received for 11,000 equity shares and pro-rata allotment was made for all the applicants. The excess application money was adjusted towards allotment.

Mrs. Shobha who was allowed 200 equity shares failed to pay F/F/C and her shares were forfeited after the final call.

Show Journal Entries in the books of Suhas Ltd. and also show its presence in Balance Sheet.

Answer 1

Journal Entries in the books of Suhas Limited

Balance Sheet of Suhas Limited

Working Notes:

1. Excess amount received at the time of application ₹ 3,000 adjusted at allotment stage, so allotment amount received in the bank is ₹ 47,000.

2. Amount called-up per share: ₹ 3 on application, ₹ 5 (including premium) on allotment i.e. ₹ 2 premium + ₹ 3 capital and balance amount ₹ 4 in two calls of the equal amount i.e. ₹ 2 on the first call and ₹ 2 on final call.

3. Mrs. Shobha was not able to pay F/F/C i.e. first and final call means 200 × ₹ 2 first call money = ₹ 400 and 200 × ₹ 2 final call money = ₹ 400.

Mrs. Shobha paid ₹ 6 per share towards capital which the company received and the company has the right to forfeit only paid amount means the company forfeited ₹ 1,200 of Mrs. Shobha.