Question

Kalyan Company offered 10,000 shares of Rs. 10 each payable as Rs. 3 on application, Rs. 2.50 on allotment, Rs. 2.50 on first call and Rs. 2 on the final call. The public applied for 15,200 shares. The shares were allotted on a pro-rata basis to the applicants of 15,000 shares. All shareholders paid the allotment money excepting one shareholder who was allotted 20 shares. These shares were forfeited. The first call was made thereafter. The forfeited shares were re-issued at Rs. 9 per share, Rs. 8 paid up. The final call was not made.

Pass necessary journal entries in the books of Kalyan Company.

Hint:

Pro-rata ratio 10,000:15,000 = 2:3; excess application money adjusted against allotment; unpaid amount is forfeited.

Answer 1

Note: allotment is made pro-rata only to the applicants of 15,000 shares, so applications for the remaining 200 shares are treated as rejected and their money refunded.
Step 1: Application money received:
15,200 shares × Rs. 3 = Rs. 45,600 received in total; of this, applications for 200 shares are rejected and refunded (200 × 3 = Rs. 600), and the pro-rata ratio applies to the remaining 15,000 applications for 10,000 shares issued (ratio = 10,000/15,000 = 2/3).

Particulars	Dr. (Rs.)	Cr. (Rs.)
Bank A/c Dr.	45,600
To Share Application A/c		45,600
(Application money received on 15,200 shares)
Share Application A/c Dr.	45,600
To Share Capital A/c (10,000 × 3)		30,000
To Share Allotment A/c (excess adjusted, 15,000×3 − 10,000×3)		15,000
To Bank A/c (refund on 200 rejected shares)		600

Step 2: Allotment money due and received:
Allotment due = 10,000 × 2.50 = Rs. 25,000; less excess application already adjusted Rs. 15,000 = Rs. 10,000 net due in cash. Of this, the defaulting shareholder's 20 shares carry a net allotment due of 20×2.50 − (his excess application 10 shares × 3 = 30) = 50−30 = Rs. 20, unpaid. So cash actually received = 10,000 − 20 = Rs. 9,980.

Particulars	Dr. (Rs.)	Cr. (Rs.)
Share Allotment A/c Dr.	25,000
To Share Capital A/c		25,000
(Allotment money due on 10,000 shares @ Rs. 2.50)
Bank A/c Dr.	9,980
To Share Allotment A/c		9,980

Step 3: Forfeiture of 20 shares:
Called-up on these shares = (3+2.50)×20 = Rs. 110; amount actually received from this holder = his original application money for 30 shares applied × 3 = Rs. 90 (this covers application on 20 allotted shares + excess adjusted towards allotment); unpaid = Rs. 20.

Particulars	Dr. (Rs.)	Cr. (Rs.)
Share Capital A/c Dr. (20 × 5.50)	110
To Share Forfeiture A/c		90
To Share Allotment A/c		20

Step 4: First call on the remaining shares:
(10,000 − 20) = 9,980 shares × Rs. 2.50 = Rs. 24,950, assumed fully received:

Particulars	Dr. (Rs.)	Cr. (Rs.)
Share First Call A/c Dr.	24,950
To Share Capital A/c		24,950
Bank A/c Dr.	24,950
To Share First Call A/c		24,950

Step 5: Re-issue of forfeited shares (20 shares, Rs. 9 received, Rs. 8 paid-up):

Particulars	Dr. (Rs.)	Cr. (Rs.)
Bank A/c Dr. (20×9)	180
To Share Capital A/c (20×8)		160
To Securities Premium A/c (20×1)		20
Share Forfeiture A/c Dr.	90
To Capital Reserve A/c		90

Step 6: Final call — not made, so no entry is passed for it.

Final Answer:
The six journal entries above record application, allotment (with pro-rata adjustment and refund), forfeiture of 20 shares (Rs. 110 called up, Rs. 90 received, Rs. 20 unpaid), first call, and re-issue of the forfeited shares at a premium of Re. 1 each, with the entire forfeited amount of \[ \boxed{Rs.\ 90} \] transferred to Capital Reserve since the shares were reissued without any loss.