Q 118 DK Goel Issue of Shares Solutions Class 12 CBSE (2024-25)

Solution of Question number 118 of Accounting for Companies Issue of shares chapter 6 of DK Goel Class 12 CBSE (2024-25)

K Limited has been registered with an authorised capital of ₹ 20,00,000 divided into 20,000 shares of ₹ 100 each, of which 10,000 shares were offered for public subscription at a premium of ₹ 5 per share, payable as under:

Applications were received for 18,000 shares, of which applications for 3,000 shares were rejected outright; the rest of the applications were allotted 10,000 shares on pro-rata basis. Excess application money was transferred to allotment.

All the moneys were duly received except from Sundar, holder of 200 shares, who failed to pay allotment and first call money. His shares were later forfeited, and re-issued to Shyam at ₹ 60 per share, ₹ 70 paid up. Final Call has not been made. Pass necessary Cash Book and Journal entries in the books of K Limited.

[Ans. Amount received on allotment ₹ 98,000; Amount transferred to capital Reserve ₹ 7,000; Cash at Bank ₹ 7,56,000.]

Note: Securities Premium Account has been debited in the entry of forfeiture because it is assumed that the entire excess application money is utilised for share capital.

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