1. BY
mr. j. jothi rishi vigneshvar
ASSISTANT PROFESSOR
PG DEPARTMENT OF COMMERCE
ST.JOSEPH’S COLLEGE (ARTS & SCIENCE), KOVUR, CHENNAI – 128.
2. Spring Ltd. invited applications for issuing 60,000 equity shares at ₹ 10 each
at a premium of Rs.5 per share. The amount was payable as follows:
On Application : Rs. 4 per share (including Rs.2 premium)
On Allotment : Rs.6 per share (including Rs.3 premium)
On First Call : Rs. 3 per share (including Rs. 1 premium)
On Second & Final Call : Balance Amount
The Applications received for 80,000 shares and the allotment has been made
on pro-rata basis. Aman, a shareholder holding 2,400 shares did not pay the
allotment money and his shares were forfeited. Mohan, a holder of 6,000
shares, paid the second call along with the first call. Arvind, a holder of 1,200
shares, failed to pay the first call money and his shares were forfeited. Second
and final call was made afterwards and was duly received. All the forfeited
shares were reissued at Rs. 9 per share fully paid up. Pass necessary journal
entries for the above transactions in the books of the company.
Pro-rata allotment, forfeiture and reissue
3. Computation of amount received on Allotment:
Allotment due (60000 shares @6 per share) 360,000.00
Less: Excess Application money adjusted in Allotment 80,000.00
Amount due to be received 280,000.00
Less: Calls in Arrears from Aman 11,200.00
Amount received on Allotment 268,800.00
4. Calls in Arrears of Aman:
Number of shares applied (2400*4/3) 3200
Less: Number of shares allotted 2400
Excess shares applied 800
Multiply: Application Money per share 4
Excess Application money received 3200
Number of shares allotted 2400
Multiply: Allotment money per share 6
First Call money due 14400
Less: Excess Application money received 3200
Calls in Arrears of Aman 11200
5. Computation of Amount received at the time of First call:
First Call money due 172,800.00
Less: Calls in Arrears of Arvind (1200*3) 3,600.00
First Call money received 169,200.00
Add: Calls in advance received (6000*2) 12,000.00
Total Amount received 181,200.00
Note: Here, the excess application money received from Aman is Rs.3200 and
Securities Premium reserve due at the time of allotment is Rs.7200. Thus,
securities premium not received is Rs. 4,000, which has been cancelled at the
time of forfeiture.
6. Particulars Debit Rs. Credit Rs.
Bank A/c Dr. 320,000.00
To Equity Share Application A/c 320,000.00
(Being application money received for 80,000 shares @ 4 per share)
Equity Share Application A/c Dr. 320,000.00
To Equity Share capital A/c 120,000.00
To Securities Premium reserves A/c 120,000.00
To Equity Share Allotment A/c 80,000.00
(for application money transferred to share capital)
Equity Share Allotment A/c Dr. 360,000.00
To Equity Share Capital A/c 180,000.00
To Securities Premium reserve A/c 180,000.00
(for allotment due on 60000 share @6 per share including premium)
Bank A/c Dr. 268,800.00
To Equity Share Allotment A/c 268,800.00
(for allotment money received)
Equity Share Capital A/c Dr. 12,000.00
Securities Premium reserves A/c Dr. 4,000.00
To Equity Allotment A/c 11,200.00
To Share Forfeited A/c 4,800.00
(Being Shares of Aman forfeited for non payment of Allotment)
7. Equity Share First Call A/c Dr. 172,800.00
To Equity Share Capital A/c 115,200.00
To Securities Premium reserves A/c 57,600.00
(for first call due on 57,600 shares @ 3 per
share)
Bank A/c Dr. 181,200.00
To Equity Share First Call A/c 169,200.00
To Calls in Advance A/c 12,000.00
(Being first call money received and calls in
advance received)
Equity Share capital A/c Dr. 9,600.00
Securities Premium A/c Dr. 1,200.00
To Equity First call A/c 3,600.00
To Share Forfeited A/c 6,000.00
(Being share forfeited for non payment of call)
Equity Share Second and Final Call A/c Dr. 112,800.00
To Equity Share capital A/c 112,800.00
(for second call due on 56,400 shares @ 2 per
share)
Bank A/c Dr. 100,800.00
Calls in advance A/c Dr. 12,000.00
To Equity Share Second and Final Call A/c 112,800.00
(Being second and final call money received
after adjusting advance)
8. Bank A/c
(3600*9) Dr
.
32,400.00
Shares Forfeited
A/c Dr.
3,600.00
To Equity Share Capital A/c
(3600*10)
36,000.00
(Being forfeited shares reissued
@9 per share)
Shares Forfeited A/c 7,200.00
To Capital Reserve A/c 7,200.00
(Being share forfeited closed in
capital reserve)
9. Tara Tarini Mills Ltd. invited applications for 15,000 equity shares of Rs. 10 each,
payable:
On application, Rs.2 per share
On allotment on, Rs.4 per share (including premium)
On first call on, Rs. 3 per share and”
On final call on Rs. 2 per share.
Applications were received for 20,000 shares and directors decided to deal with the
7phcations as:
(a) To refuse allotment to applicants for 2,000 shares.
(b) To allot on 100% basis to applicants for 6,000 shares.
(c) To allot the remaining shares among remaining applicants on pro-rata basis
(d) To adjust the surplus applications money against the amount due on allotment.
Whole of the money was received except two calls on 75 shares, which were forfeited. Out of
these 50 shares were re-issued at Rs.7 per share.
10.
11. Share vs stock
BASIS FOR COMPARISON SHARE STOCK
Meaning The capital of a company, is divided
into small units, which are
commonly known as shares.
The conversion of the fully paid up
shares of a member into a single
fund is known as stock.
Is it possible for a company to make
original issue?
Yes No
Paid up value Shares can be partly or fully paid
up.
Stock can only be fully paid up.
Definite number A share have a definite number
known as distinctive number.
A stock does not have such number.
Fractional transfer Not possible. Possible
Nominal value Yes No
Denomination Equal amounts Unequal amounts