Pro Rata Allotment Forfeiture and Reissue Questions

SUBJECT- ACCOUNTANCY

         LANGUAGE- ENGLISH

        CLASS - 12TH 

Question-1.  Alpha limited invited applications for issuing 75000 equity shares of ₹10  each. The amount was payable as follows:-

On application- ₹4 per share 

On First call- ₹3 per share 

On second and final call- balance 

Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due on first call. Vibha who was allotted 750 shares faild to pay the first call. Her shares were immediately forfeited. Afterwards the second call was made . The amount due on call we as also received except on 1,000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were reissued to Mohit for ₹9000 at fully paid-up.

Pass necessary Journal entries in the books of Alpha limited for the above transactions.

( Answer-.  Capital Reserve:- ₹3,250)

Question-2.   Tata limited having an authorised capital of ₹20,00,000 in share of ₹100 each invited application for 10,000 shares payable as:-

On application- ₹20 per share 

On allotment- ₹30 per share 

On First call- ₹25 per share 

On second and final call - ₹25 per share 

The company received applications for 12,000 shares applications for 10,000 shares were accepted full and the money on the application rejected was returned.

All money due as stated above was received with the exception of the second call and final call on 250 shares. These shares were forfeited and half of these shares were reissued as fully paid-up at ₹90 per share .

Pass necessary Journal entries and show how the share capital account will stand in the balance sheet .

( Answer-. Capital Reserve:- ₹8,125; Balance sheet Total:- ₹10,05,000).

 Question-3.  H Limited issued a prospectus inviting applications for 20,000 shares of ₹10 each at a premium of ₹2 per share payable as follows:-

On application-. ₹2 per share 

On Allotment ( including premium) -. ₹5 per share 

On First call- ₹3 per share 

On second and final call - ₹2 per share 

Applications were received for 30,000 shares and pro rata allotment was made on the applications for 24,000 shares. Money overpaid on applications was adjusted against amount due on Allotment.

Ramesh to whom  400 shares were allotted failed to pay the allotment money and on his subsequent failure to pay the first call his share were forfeited. Mohan the holder of 600 shares, failed to pay two calls and his shares were forfeited after the second call.

Of the shares forfeited, 800 shares were sold to krishan credited as fully paid-up for ₹9 per share, the whole of Ramesh's shares being included.

Pass journal entries and prepare Balance sheet.

( Answer- Capital Reserve:- ₹2,160; Balance sheet Total:- ₹2,40,360)

Question-4.  Radha Mohan Limited invited application for issuing 4,00,000 equity shares of ₹50 each. The amount was payable as follows:-

On application- ₹15per share 

On Allotment- ₹25 per share 

On First and Final call- ₹10 per share 

Applications for 6,00,000 shares were received and pro rata  allotment was made to all the applicants on following basis:- 

Application for 4,00,000 shares were allotted 3,00,000 shares

Application for 2,00,000 shares were allotted 1,00,000 shares 

It was decided that excess amount on application will be adjusted towards sums due on allotment and surplus if any will be refunded. Vibhuti who was allotted 6,000 shares out of the group applying for 4,00,000 shares did not pay the allotment money and his shares were forfeited immediately. Afterwards these forfeited shares were reissued at ₹30 Per shares  fully paid up. Letter on, first and final call was made. Shahid who had applied for 2,000 shares out of the group of applying for 2,000,00 shares fail to pay first and final call and his shares were also forfeited. These shares were afterwards reissued at ₹60 per share fully paid-up.

Pass necessary journal entries in the books of Radha Mohan Limited for the above transactions.

( Answer- Capital Reserve:- ₹40,000)

Question-5.   Dogra Limited an authorised capital of ₹1,00,00,000 divided into equity shares of ₹100 each. The company offered 84,000 shares to the public at premium.

The amount was payable as follows:- 

On application- ₹30 per share 

On allotment- ₹40 per share 

On first and final call- ₹50 per share 

Applications were received for 80,000 shares. All sums were duly received ekexcept the following:

Lakhan, a holder of 200 shares did not pay allotment and call money.

Paras, a holder of 400 shares didi not pay call money .

The company forfeited the shares of Lakhan and Paras. Subsequently, the forfeited shares were issued for ₹80 per share as fully paid-up. Show the entries for the above transactions in the cash book and journal of the company.

( Answer- Capital Reserve:- ₹14,000; Balance of Cash Book:- ₹96,10,000)

Question-6.   Jeevan Dhara Ltd. Invited applications for issuing 1,20,000 equity shares of ₹10 each at a premium of ₹2 per share. The amount was payable as follows:

On application - ₹2 per share 

On allotment - ₹5 per share ( including premium)

On First and final call- Balance 

Applications for 1,50,000 shares were received. Shares were allotted to all the applicants on pro rata basis. Excess money received on applications adjusted towards sums due on Allotment. All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call. Madhur who was allotted 2,400 shares failed to pay the first and final call. Shares of both Manu and Madhur were forfeited. The forfeited shares were reissued at ₹9 per share as fully paid-up.

Pass necessary Journal entries for the above transactions in the books of Jeevan Dhara Ltd.

( Answer-. Capital Reserve:- ₹13,200)

Question-7.  D Ltd. Offered to the public 20,000 equity shares of ₹10 each payable ₹4 on application, ₹2 on allotment, ₹2 on first call and the balance on final call. Applications totalled for 35,000 shares. Applications for 10,000 shares were rejected. Those totalling 15,000 shares were allotted 10,000 shares and the remaining applications were accepted in full. Excess application money was utilised towards the money due on allotment. Both the calls were made. One shareholder holding 500 shares failed to pay the two calls and as a consequence his shares were forfeited. 200 of these shares were reissued as fully paid-up for as ₹6 per share. 

Record the above in the company's Journal and cash book and prepare the balance sheet.

( Answer- Capital Reserve:- ₹400).