Nilgiri Tea Ltd. invited applications from the public for the issue of 1,00,000 Equity Shares of ₹ 20 each payable as: ₹ 5 on Application ₹ 7 on Allotment
Nilgiri Tea Ltd. invited applications from the public for the issue of 1,00,000 Equity Shares of ₹ 20 each payable as:
₹ 5 on Application
₹ 7 on Allotment
Balance on Call
The public applied for 90,000 shares which were duly allotted by the company. ₹ 6,27,200 were received by the company on allotment and ₹ 7,12,800 on call.
The company forfeited those shares on which both, allotment and call money was not received.
Three-fourth of the forfeited shares were reissued as fully paid up at the maximum discount allowed by law.
The company paid share issue expenses of ₹ 50,000 which were completely written off at the end of the year.
The company had ₹ 60,000 in its Securities Premium Account.
You are required to prepare Cash Book and Pass Journal Entries to record the above transactions in the books of the company by opening Calls in Arrears Account.
[Ans. Cash at Bank ₹ 17,44,500; Number of shares forfeited 400; Out of which, 300 shares reissued @ ₹ 15 each. No amount will be transferred to Capital Reserve.]
Anurag Pathak Answered question October 20, 2024
Solution:-
Note:-
(i) 300 shares are forfeited as, allotment and call money not received.
(ii) Maximum discount on reissue of shares is always equal to the amount received. as ₹ 5 application money has received, thus maximum discount on reissue of shares would be ₹ 5.
(iii) Share issue expenses first written off against securities premium than after profit & Loss Account.
Anurag Pathak Edited answer October 20, 2024
