Page 15 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes 6. On receipt of first call money:
Bank Account Dr. (with actual first call money received)
To Share First Call Account
(Being receipt of first call money)

The above No. 5 & 6 entries would be similar for subsequent calls. These subsequent calls
are distinguished from each other by their serial numbers i.e., second call, third call and so
on. In the case of last call the word “Final” is also added to that call as second and final call.
If there is requirement to prepare cash book too, above all, cash and bank transaction will
be entered in the cash book and other transactions will appear in ‘Journal Proper.’

Task If no contra information is given, preference shares are deemed to be:

(a) Cumulative, Convertible and Participating.
(b) Non-cumulative, Convertible and Participating.
(c) Non-cumulative, Non-Convertible and Participating
(d) Cumulative, Non-Convertible and Non-Participating.

Self Assessment

True or False:

1. Preference share is that share which alone enjoys a preferential right regarding payment
of dividend.
2. At least 10% amount of the face value should be payable with application.

3. A maximum discount of 10% can be allowed on shares.

When Equity or Ordinary Shares are Issued at Par and Shares are Fully Subscribed

Example 1: X Ltd. was registered on January 1, 2006 with an authorised capital of
10,00,000 divided into 10,000 equity shares of 100 each. It offered 9,000 equity shares at par,
payable as under:
On Application 10

On Allotment 50
On First Call 20
On Second and Final Call 20
All the shares were subscribed and amount duly received. Pass the necessary journal entries and
prepare the Balance Sheet of the company.

8 LOVELY PROFESSIONAL UNIVERSITY