Page 29 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes The subscription list closes on May 11, 2006 and directors proceed to allot on May 18, 2006. The
shares are fully subscribed and the application money (including premium) is received in full.
The allotment money is received by June 30, 2006, except as regards 1,000 shares. It is expected
that the allotment money on these 1,000 shares will not be received. The first call and second call
money is received by September 30, 2006 and December 30, 2006 respectively, barring the
second call money on 400 shares, which is not received and which is not likely to be received.

Pass the necessary journal entries in the books of Bhatia Limited.
Solution:
Bhatia Limited Journal

2006
May 11 Bank Account Dr. 5,00,000
To Share Application Account 5,00,000
(Being receipt of application money on 1,00,000 shares
@ 5 each)
May 18 Share Application Account Dr. 5,00,000
To Share Capital Account 3,00,000
To Share Premium Account 2,00,000
(Being transfer of application money to capital and share
premium account)
Share Allotment Account Dr. 3,00,000
To Share Capital Account 3,00,000
(Being allotment money due on 100,000 shares @ 3 per
share)
Either:
June 30 Bank Account Dr. 2,97,000
To Share Allotment Account 2,97,000
(Being receipt of allotment money on 99000 shares)
OR
Bank Account Dr. 2,97,000
Call-in-Arrear Account Dr. 3,000
To Share Allotment Account 3,00,000
(Being receipt of allotment money on 99,000 shares and
unpaid amount on 1000 shares transferred to calls-in-
arrear)
Sep. 30 Share First Call Account Dr. 2,00,000
To Share Capital Account 2,00,000
(Being first call money due on 1,00,000 shares @ 2 each)
Either:
Bank Account Dr. 1,98,000
To Share First Call Account 1,98,000
(Being receipt of first call money on 99000 shares)
OR
Bank Account Dr. 1,98,000
Calls-in-Arrear Account Dr. 2,000
To Share First Call Account 2,00,000
(Being receipt of first call money on 99000 shares and
unpaid amount on 1,000 shares transferred to calls-in-
arrear)
Dec. 31 Share Second & Final Call Account Dr. 2,00,000
Contd...
To Share Capital Account 2,00,000
(Being second & final call money due on 1,00,000 shares @
2 each)
Either:
Bank Account Dr. 1,97,200

To Share Second & Final Call Account
22 LOVELY PROFESSIONAL UNIVERSITY 1,97,200
(Being receipt of second & final call on 98,600 shares)
OR
Bank Account Dr. 1,97,200
Calls-in-arrear A/c Dr. 2,800
To Second & Final Call Account 2,00,000
(Being receipt of second & final call and unpaid transferred
to calls-in-arrear account)