Page 31 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

2006

Feb. 1
To Equity Share Application Account

(Being receipt of application money on 6,500 shares @
2 Per share)

Equity Share Application Account
Dr. 13,000
3,000

To bank account
10,000
To Equity Share Capital Account

(Being application money transferred to share capital
and refund to 1500 unsuccessful applicants)
Equity Share Allotment Account
March 1 Bank Account Dr. 13,000 13,000
Dr. 15,000

To Equity Share Capital Account 10,000
To Equity Share Premium Account 5,000
(Being allotment money due on 5000 share @ 3 each
including premium of Re 1 per share)
Accounting for Companies-I
Bank Account Dr. 15,030
To Equity Share Allotment Account 14,910
To Calls-in-Advance Account 120
Notes (Being receipt of allotment money on 4,970 shares and
calls-in-advance on 20 shares)
July 1 Equity Share First & Final Call Account Dr. 30,000
To equity share capital account 30,000
(Being first and final call money due on 5,000 shares @
6)
Bank Account Dr. 29,970
Calls-in-Advance Account Dr. 120
To Equity Share First & Final Call Account 30,000
To Equity Share Allotment Account 90
(Being receipt of first and final call money on 4,980
shares and allotment money on 30 share.)
Interest on Calls in Advance Account Dr. 2.4 2.4
To Bank Account
(Being payment of interest on calls-in-advance)
Bank Account Dr. 1.5
To Interest on Calls-in-Arrear Account 1.5
(Being interest on calls in arrear received)
Working Note:
(i) Calls-in-arrear on allotment = 30 3 = 90
Interest on calls-in-arrear for 4 months (March, April, May and June) @ 5% per annum
4
= 90 ´ ´ = 1.50
12
(ii) Calls-in-advance on 20 shares for first and final call at the time of allotment = 20 6 =
120

Interest on calls-in-advance for four months (March, April, May and June) @ 6% p.a.
´ 4
´ = 2.4
12
Interest on Calls in Advance Account Dr. 2.4
To Bank Account 2.4
(Being payment of interest on calls-in-advance)
Bank Account Dr. 1.5

To Interest on Calls-in-Arrear Account 1.5
(Being interest on calls in arrear received)

1.4 Undersubscription and Oversubscription

The issue of a company is called under-subscribed, if the number of shares applied for is less
than the number of shares issued by the company. In this case the accounting entries are made on
the basis of the number of shares applied for, but minimum subscription has been received by
the company.

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