Page 37 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes Equity Share Capital Account
` `
60,00,000 By Equity Share 15,00,000
Application Account 30,00,000
To balance c/d By Equity Share Allotment Account 15,00,000
By Equity Share First & final call account
60,00,000 60,00,000

1.5 Combined Account for Share Application and Allotment

Some accountants prefer to prepare a combined account for share application and share allotment,
which is called the share application and allotment account. By preparing this account, they save
their time and energy. Only one journal entry is made for transferring the application money to
share capital account and allotment money due. Along with it, they need not make an entry for
transferring the excess application money to allotment account too.

Example 11: X Y Company was registered with an authorised capital of ` 10,00,000
which was divided into 6,000 equity shares of ` 100 each and 4,000, 8% preference shares of ` 100
each. The company issued a prospectus to issue these shares on the condition that full amount of
the shares would be paid in lump sum. All these shares were taken up and paid by the public.
Pass the necessary journal entries in the books of the company.
Solution:
Journal Entries
Date Particulars Dr. ` Cr. `
Bank Account Dr. 15,70,000
To Equity Share Application & Allotment Account 15,70,000
(Being receipt of application money on 157,000 shares

@ ` 10 per shares)
Equity Share Application & Allotment Account Dr. 12,50,000
To Equity Share Capital Account 12,50,000
(Being application money @ ` 10 and allotment money
` 15 per share credited on 50,000 equity share)
Equity Share Application and Allotment Account Dr. 4,70,000
To Bank Account to Calls-in-advance account 20,000
(Being refund of excess application money after adjusting
allotment money and adjusting in calls in advance) 4,50,000
Bank Account Dr. 1,50,000
To Equity Share Application and Allotment Account 1,50,000
(Being receipt of balance of allotment money due after
adjustment of excess application money)
Equity Share First and Final Call Account
To equity share capital account Dr. 7,50,000
(Being first and final call money due on 5000 shares 7,50,000
@ ` 25 per share)
Calls-in-advance Account Dr. 4,50,000
Bank Account Dr. 3,00,000
To Equity Share First and Final Call Account 7,50,000
(Being receipt of balance first and final call money on 50,000
shares after adjusting calls in advance)

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