Benolac Paints Ltd. invited applications for issuing 1,20,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share. The amount was payable as follows: {:("On application",,-,,"Rs. 3 per share (including premium Rs. 1),"),("On allotment",,-,,"Rs. 3 per share, and "),("On first and final call",,-,,"Rs. 6 per share(including premium Rs.1)."):} Applications for1,40,000 shares were received. Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants. Over payments onapplication were adjusted towards sums due on allotment. All calls were mede and were duly received except allotment and final call on 6,000 shares allotted to sharvi. These shares were forfeited. Afterwards, half of the forfeited shares were reissued for Rs. 33,000 as fully paid-up. Passnecessary Journal entries for the above transactions in the books of Benolac Paints Ltd.

Benolac Paints Ltd. invited applications for issuing 1,20,000 equity s

1.	Benolac Paints Ltd. invited applications for issuing 1,20,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share. The amount was payable as follows: {:("On application",,-,,"Rs. 3 per share (including premium Rs. 1),"),("On allotment",,-,,"Rs. 3 per share, and "),("On first and final call",,-,,"Rs. 6 per share(including premium Rs.1)."):} Applications for1,40,000 shares were received. Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants. Over payments onapplication were adjusted towards sums due on allotment. All calls were mede and were duly received except allotment and final call on 6,000 shares allotted to sharvi. These shares were forfeited. Afterwards, half of the forfeited shares were reissued for Rs. 33,000 as fully paid-up. Passnecessary Journal entries for the above transactions in the books of Benolac Paints Ltd.
Answer» Solution : Working Notes: 1.Calculation of Allotment MONEY not paid by Sharvi: `{:(,"Number of Applied Shares",,"Number of Allotted Shares"),(,ul(ul(1,40,000)),,ul(ul(1,20,000))),("Applications Rejected","10,000",,"NIL"),("Allotment",ul(ul(1,30,000)),,ul(ul(1,20,000))),("Pro rata Ratio",13,:,12):}` `{:((a)" Total Number of Shares applied by Sharvi ="(13)/(12)xx"6,000= 6,500 shares." ,,Rs.),("(b) Application money received on applied shares (6,500"xx"Rs.3)",,"19,500"),("Less: Application money due on shares allotted (6,500"xx"Rs.3)",,"18,000"),("(c) Excess Application money to be adjusted on allotment",,BAR(ul(ul(1,500)))),("(d) Allotment money due on shares allotted (6,000"xx"Rs.3)",,"18,000"),("Less: Excess application money to be adjusted [WN 1 (c)]",,"1,500"),("Allotment money due but not received",,bar(ul(ul(16,500)))):}` 2. Calculation of allotment money received later on: `{:("Total allotment money due (1,20,000"xx"Rs. 3)",,"3,60,000"),("Less: Allotment money already received on application stage",,"30,000"),(,,ul(3,30,000)),("Less: Allotment money not received (WN 1)",,"16,500"),(,,bar(ul(ul(3,13,500)))):}` 3. Calculation of gain on reissue of forfeited shares to be transferred to Capital Reserve: AMOUNT forfeited on REISSUED Shares of Sharvi = Rs. 13,500 `xx (3,000)/(6,000)=` Rs. 6,750. SINCE shares were reissued at premium, therefore, full amount of Rs. 6,750 is to be transferred to Capital Reserve.

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