XYZ Ltd. issued a prospectus inviting applications for 2,000 shares of Rs. 10 each at a premium of Rs. 4 per share, payable as:
`{:("On application",-,"Rs. 6 per share (including Rs. 1 premium),"),("On allotment",-,"Rs. 2 per share (including Rs. 1 premium),"),("On first call",-,"Rs. 3 per share (including Rs. 1 premium),"),("On second and final call",-,"Rs. 3 per share (including Rs. 1 premium)."):}`
Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares. It was decided to utilise excess application money towards the amount due on allotment.
X , to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Y , who applied for 72 shares failed to pay the two calls and on his such failure, his shares were forfeited.
Of the shares forfeited, 80 shares were sold to Z credited as fully paid-up for Rs. 9 per share, the whole of Y's shares being included. Prepare Journal, Cash Book and the Balance Sheet.

Answer

Capital Reserve-Rs. 400; Balance Sheet Total-Rs. 28,088.

Explanation

(i) No. of Shares applied by X `=(2,400)/(2,000)xx40=48` shares.
(ii) Application money received on shares applied `= 48 xx Rs. 6 = Rs. 288.
(iii) Applicaion money due on shares allotted`=40xxRs. 6 = Rs. 240.
(iv) Excess Application Money [ii-iii]=[Rs. 288-Rs.240]=Rs. 48.
(v) Excess application money adjusted towards allotment as follows:
As a part of Share Capital `=40xx=Rs. 1 = Rs. 40`.
As Securites Premium = Rs. 48-Rs. 40=Rs. 8.
(vi) Premium not paid by X , when allotment money was due = Rs. 40-Rs. 8 = Rs. 32, when first call was due = Rs. 40.
`{:("Accounting Entry for Forfeiture of X's Shares:",," Rs."," Rs."),("Share Capital A/c (40"xx"Rs.8)","...Dr."," 320",),("Securities premium Reserve A/c (Rs. 80-Rs. 8)","...Dr."," 72",),(" To Shares Allotment A/c (Rs. 80 - Rs 48)",,," 32"),(" To Shares First Call A/c (40"xx"Rs. 3 )",,," 120"),(" To Forfeited Shares A/c (Rs. 200 + Rs. 40)",,," 240]"):}`