Issue of shares - Comprehensive sums Part II ©David Thomas
VII.Application and Allotment together
Q1.A company issued for 100,000 Shares. It received applications for 1,40,000 shares . Share
value ₹10 at a premium of ₹5 . Share money payable as follows:
Application and Allotment ₹8 ( incl. premium of ₹3)
I Call with Balance with balance premium
Shares were allotted on the following basis :
1) Applied for 80,000 shares --> 60,000 shares Allotted
2) Applied for 60,000 shares --> 40,000 shares Allotted
X who applied for 400 shares failed to pay the I call money (1st group )
Y the holder of 200 failed to pay the I call money ( 2nd group)
All the Shares were forfeited after I call and 300 shares reissued at ₹9 which includes equally
from X and Y. Pass Journals
Q. 2 Guru Limited’ invited applications for issuing 80,000 equity shares of ₹10 each at a
premium of ₹ 10 per share. The amount was payable as follows:
On application and allotment ₹10 (including ₹5 premium)
On first and final call ₹ 10 (including ₹5 premium)
Applications for 1,00,000 share were received. Applications for 10,000 shares were rejected and
application money was refunded. Shares were allotted on pro-rata basis to the remaining
applicants. Excess application money received from applicants to whom shares were allotted on
pro-rata basis was adjusted towards sums due on first and final call. All calls were made and
were duly received except the first and final call money from Kumar who had applied for 1,800
shares. His shares were forfeited. Half of the forfeited shares were re-issued for ₹5400 as fully
paid up.
Pass necessary journal entries for the above transactions in the books of ‘Guru Limited’.
VIII .REVERSE SUM -FAILURE NOT GIVEN -- > PAID GIVEN
Q1.A company was registered with capital of ₹2,00,000 of ₹10 each .6,000 shares issued to
vendors for purchase of Buildings .The remaining shares offered to the public
The company received applications for 10000 shares and The company called for ₹5 in the first
year . The share money payable:
Application ₹2 Allotment ₹1 I call ₹1 II call ₹1
The amount received in respect of these shares were
5,000 shares full amount called
2,500 shares ₹4
1,500 shares ₹3
1,000 Shares ₹ 2
Directors Forfeited all the shares which were paid less than ₹ 4 share and reissued at ₹ 4.5 per
share .Pass Journals
IX EXCESS AMOUNT TRASFERED TO SECURITIES PREMIUM
Q1.Jalan Ltd. invited applications for 30,000 shares of ₹10 each payable as ₹7.50 on application,
₹ 2.00 (including ₹ 1.50 premium) on allotment and balance on call. Applications were received
for 36,000 shares and it was decided to deal with the same as follows in consultation with Stock
Exchange Authorities:
a. to refuse allotment to an applicant for 1,600 shares.
b. to allot in full to an applicant for 4,400 shares.
c. to allot the remaining shares on a prorate basis among other applicants.
d. to utilize the surplus received on application in part payment of amount due on allotment.
All shareholders, except the following, paid all their sum when due.
Mr. X, to whom 128 shares were allotted, did not pay anything after allotment.
Mr.Y who applied for 75 shares, did not pay anything after application ( pro rata group ).
The shares of Mr. X and Mr. Y were forfeited and were re-issued as fully paid up for ₹9
and ₹11 per share respectively at different intervals of time. Pass Journals
Q2. A company issued 50,000 equity shares of ₹10 at a premium of ₹8
Share money payable as follows:
Application and Allotment ₹7
I call - Balance with premium
Company received applications for 80,000 shares and allotment made for all the applicants .Raj
who applied for 8,000 shares failed to pay I call and Raja the holder of 2000 shares failed to pay
I call . All the failed shares forfeited and 50 % of forfeited at 90% of the share value which
includes 2000 shares from Raj and 1500 shares from Raja. Pass Journals.
Q3.A company issued for 80,000 shares at 10 each at premium of 40%. The company received
applications for 140,000 shares. Allotment made as follows:
1. Return 20,000 shares fully
2. Allot 10,000 shares fully
3. Allot 20,000 shares for 40,000 shares
4. The balance on pro rata basis
Application ₹3 Allotment ₹6 (incl. prem ) and Balance on One call
X in group 3 Applicant for 4000 shares failed to pay share allotment and shares forfeited
Y in group 4 Applicant for 7000 shares paid his call money with allotment
Z in group 2 failed to pay Call money for 3000 shares and his shares forfeited
Of the forfeited shares 4000 shares reissued at ₹36,000 as fully paid up
Pass Journal entries
X. EXCESS APPLICATION TRASFERED TO ALLOTEMENT THEN TRANSFER TO
BANK
Q1.Rajesh ltd invited applications for 200,000 equity shares of ₹10 each payable ₹2on
application, ₹3 on allotment and the balance on first and final call . Applications were received
for 600,000 shares and all shares allotted on pro rata basis. The excess application money was to
be adjusted against allotment only. Sunita, a share -holder who applied for 6000 shares failed to
pay call money and his shares forfeited and reissued at ₹8 per share full paid up. Pass Journals.
Q2.Sundar Ltd invited applications for ₹ 500,000 equity shares of ₹100 each payable ₹30 on
application , ₹20 on allotment and the balance on first and final call . Applications were
received for 10,000 shares and all shares allotted on pro rata basis. The excess application money
was to be adjusted against allotment only. Rajan, who applied for 200 shares failed to pay call
money and his shares forfeited and 80 shares reissued at ₹90 per share fully paid up. Pass
Journals.
XI. SHARES RE ISSUED AT MAXIMUM DISCOUNT
Q1.A company issued ₹10,00,000 shares of ₹10 each at a premium of ₹2 payable
₹2 on application,
₹5 On allotment ( incl prem )
₹2 on first call and
balance on II call .
The company received applications for 2 times. The company rejected 80,000 shares and the
balance allotted on prorata basis.
X the share- holder of 10,000 shares failed to pay allotment and first call, his shares were
forfeited. Y who applied for 6,000 shares failed to pay his calls, his shares were forfeited.
These shares were reissued at maximum discount. Pass journal entries.
XII. FINDING FORFEITED SHARES THROUGH ALLOTMENT AND I CALL
RECEIVED
Q1. X ltd was registered capital of ₹10,00,000 of ₹10 each. The company offered 60,000
shares to the public . Application ₹2 , ₹4 per share each on allotment and First and final call .
The company received applications and Shares allotted as follows :
Applications for 40,000 shares - Full
Applications for 50,000 shares - 40 %
Applications for 2000 shares - Nil
₹172,000 received on account of allotment money (excluding the amount carried from
application ) and ₹228,000 on first and final call . The company forfeited the shares who failed
to pay allotment and call money. All the shares reissued at ₹9 per share .
Pass Journals.
XIII. APPLICATION EXCESS MONEY TRANSFERRED TO ALLOTEMENT and I
CALL
1.A company issued 50,000 shares and received 1,10,000 shares. Share value ₹10.
Application ₹3
Allotment ₹3
I call ₹4
The company received applications for 1,10,000 shares . The allotment was made as follows:
1. To return 10,000 shares fully
2. To allot 50% of Shares to X who applied for 20,000 shares
3. To allot fully to Y for 10,000 shares
4. To allotment the balance on prorate basis
5. Transfer any excess money to allotment and First call
Y failed to pay share allotment and shares forfeited.
Z in the prorate group applied for 7,000 shares failed to pay call and his shares forfeited.
12,000 shares are reissued for ₹1,08,000 as fully paid up includes Z shares fully .
Pass Journals.
Q2. A company offered to the public 300,000 equity shares of ₹10 each at a premium of 5 %.
It received applications for 600,000 shares and allotment was made as follows:
1. To reject 50,000 shares fully
2. To allot 30,000 shares fully
3. To allot 70,000 shares for 100,000 shares
4. To allot the balance on pro rata
5. To transfer the excess application money to share allotment and Share I call
Share money payable as follows: Share application ₹3 Share allotment ₹2.5
Share I call ₹2 Shares II call – Balance
X who applied for 10,000 shares belongs to group 3 failed to pay the allotment money and I call
his shares forfeited
Y the holder of 20,000 shares belong to group 4 failed to pay I and II call, his shares were
forfeited.
Z the holder of 8,000 shares belong to group 2 failed to pay the allotment money his shares
forfeited immediately.
A, holder of 2000 shares paid his II call money with I call.
Of the forfeited 15,000 shares were reissued at ₹9 per share which was taken equally from X,Y
and Z . Pass Journals
Q3.Joy Ltd .invited applications for issuing 20,000 equity shares of ₹ 10 each at par. The amount
was payable as follows:
On Application ₹ 3 per share
On Allotment ₹ 4 per share
On First and find call – Balance amount
The issue was oversubscribed by three times. Application for 20% shares were rejected and the
money was refunded .Allotment was made to the remaining applicants as follows:
Category No. of Shares Applied No. of Shares Allotted
I 30,000 15,000
II 18,000 5,000
Excess money received with applications was adjusted towards sums due on allotment.
Money in excess to sums due on allotment was adjusted towards sums due on first and final
call , any money in excess to sums due on first and final call was refunded.
Kavi, a shareholder who had applied for 600 shares, failed to pay the remaining allotment money
and his shares were immediately forfeited, Kavi belonged to category I.
Afterwards the first and final call was made. Gupta, who had applied for 400 shares, failed to pay
the first and final call. Gupta also belonged to Category I.
Shares of Gupta were also forfeited after the first and final call. The forfeited shares were
reissued at ₹12 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of Joy Ltd.
Q4 Issued 100,000 Received 3,00,000 Share value Rs. 10 at Rs. 2 premium
The share value payable as follows;
Application Rs. 2 Allotment Rs. 4 I call Rs. 2 II call - balance
The allotment was made as follows:
1. To return 50,000 shares
2. To allot full for 20,000 shares
3. To allot 20,000 for 30,000 shares
4. To allot the balance on prorata basis
5. To transfer the balance of excess money to Share allotment and calls
X, the applicant(in III group) for 3000 shares failed to pay his allotment and I call , his shares
forfeited
Y . (in IV group )the holder of 6000 shares failed to pay the two calls, his shares forfeited .
Z in the group II holder of 2000 shares failed to pay allotment his shares forfeited
A who applied for 1500 in group III paid his II call money with I call
7,000 shares are reissued at Rs. 9 each which includes Y shares fully
©David Thomas
