The following informations are provided regarding the shares: 20,000 applications were received on the issued of 10,000 ordinary shares of Rs.100 each at a premium of 10%. The shares were issued…

Journal Entries for Share Application, Allotment, and Final Call

1. Journal Entry for Share Application

When 20,000 applications were received for 10,000 shares of ₹100 each at a 10% premium (₹110 per share), the company received ₹30 per share as application money.

• Total shares applied for: 20,000
• Total application money received: 20,000 × ₹30 = ₹600,000
• Allotment made to:
  • 4,000 applicants: Full allotment (6,000 shares)
  • 4,000 applicants: Nil allotment (0 shares)
  • 12,000 applicants: 6,000 shares (pro-rata allotment)

Journal Entry:

Date: [Date]
Particulars                     | L.F. | Amount (₹)
--------------------------------|------|------------
Bank A/c                        | Dr.  | 600,000
To Share Application A/c        |      | 600,000
(Being application money received on 20,000 shares @ ₹30 per share)

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2. Journal Entry for Share Allotment

• Shares allotted: 10,000 (₹110 per share)
• Allotment money due per share: ₹40
• Total allotment money due: 10,000 × ₹40 = ₹400,000
• One shareholder paid full amount (₹110) for 500 shares instead of ₹40 on allotment.
  • Excess amount received: 500 × (₹110 - ₹40) = ₹35,000

Journal Entry:

Date: [Date]
Particulars                     | L.F. | Amount (₹)
--------------------------------|------|------------
Share Allotment A/c             | Dr.  | 400,000
Share Application A/c          | Dr.  | 35,000
To Share Capital A/c            |      | 1,000,000
To Securities Premium A/c       |      | 100,000
(Being allotment made for 10,000 shares @ ₹110; ₹40 called up; excess ₹35,000 received on 500 shares)

Explanation:

• Share Capital A/c: 10,000 shares × ₹100 = ₹1,000,000
• Securities Premium A/c: 10,000 shares × ₹10 = ₹100,000
• Total called-up amount: ₹400,000 (₹40 per share)
• Excess amount (₹35,000) transferred to Share Application A/c (since it was received in advance).

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3. Journal Entry for First and Final Call

• Amount due per share on first & final call: ₹40
• Total call money due: 10,000 × ₹40 = ₹400,000
• Total amount received (including excess from allotment):
  • Normal call money: 9,500 shares × ₹40 = ₹380,000
  • Excess from allotment (already received): ₹35,000
  • Total received: ₹415,000 (but only ₹400,000 is due, so ₹15,000 is refundable)

Journal Entry:

Date: [Date]
Particulars                     | L.F. | Amount (₹)
--------------------------------|------|------------
Bank A/c                        | Dr.  | 415,000
To Share First & Final Call A/c |      | 400,000
To Share Allotment A/c          |      | 15,000
(Being first & final call of ₹40 per share received; ₹15,000 excess refunded)

Refund Entry (if required):

Date: [Date]
Particulars                     | L.F. | Amount (₹)
--------------------------------|------|------------
Share Allotment A/c             | Dr.  | 15,000
To Bank A/c                     |      | 15,000
(Being excess amount refunded)

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4. Final Journal Entry (Closing Entries)

After all calls are received, the following entries are passed to close the call accounts and transfer amounts to Share Capital and Securities Premium.

Date: [Date]
Particulars                     | L.F. | Amount (₹)
--------------------------------|------|------------
Share Application A/c          | Dr.  | 600,000
Share Allotment A/c             | Dr.  | 400,000
Share First & Final Call A/c    | Dr.  | 400,000
To Share Capital A/c            |      | 1,000,000
To Securities Premium A/c       |      | 100,000
(Being all call money transferred to Share Capital and Securities Premium)

Verification of Amounts:

• Total received:
  • Application: ₹600,000
  • Allotment: ₹400,000 (including ₹35,000 excess)
  • First & Final Call: ₹400,000 (including ₹15,000 excess)
  • Total: ₹1,400,000
• Total due (10,000 shares × ₹110): ₹1,100,000
• Excess received (₹35,000 - ₹15,000 refund): ₹20,000 (to be adjusted in Share Application A/c)

Final Adjustment (if any):

Date: [Date]
Particulars                     | L.F. | Amount (₹)
--------------------------------|------|------------
Share Application A/c           | Dr.  | 20,000
To Share Capital A/c            |      | 20,000
(Being excess application money adjusted to Share Capital)

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Final Position of Share Capital

All calls were duly received, and the company’s share capital is fully subscribed. The excess amounts were adjusted appropriately.