‘Parimal Company Ltd.’ issued 1,00,000 preference shares of ₹ 20 each payable as ...
| On application | ₹ 8 |
| --- | --- |
| On allotment | ₹ 6 |
| On first call | ₹ 4 |
| On final call | ₹ 2 |
Company received application for all these shares and received all the money.
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Question

‘Parimal Company Ltd.’ issued 1,00,000 preference shares of ₹ 20 each payable as ...
| On application | ₹ 8 |
| --- | --- |
| On allotment | ₹ 6 |
| On first call | ₹ 4 |
| On final call | ₹ 2 |
Company received application for all these shares and received all the money.
Pass journal entries in the books of Parimal Company Ltd.

Accepted Answer

>

> [!TLDR]
> Since all shares are applied for and all money is received, each of the four stages (application, allotment, first call, final call) is recorded with two entries: money into Bank, then the amount transferred to Preference Share Capital. Total capital raised = ₹20,00,000.
>
> **Working note — money per stage (1,00,000 shares):**
>
> | Stage | Per share (₹) | Total (₹) |
> | --- | --- | --- |
> | Application | 8 | 8,00,000 |
> | Allotment | 6 | 6,00,000 |
> | First call | 4 | 4,00,000 |
> | Final call | 2 | 2,00,000 |
> | **Total** | **20** | **20,00,000** |
>
> **Journal of Parimal Company Ltd.**
>
> | Particulars | L.F. | Dr (₹) | Cr (₹) |
> | --- | --- | --- | --- |
> | Bank A/c ................................ Dr | | 8,00,000 | |
> |   To Preference Share Application A/c | | | 8,00,000 |
> | *(Application money received on 1,00,000 shares @ ₹8)* | | | |
> | Preference Share Application A/c ...... Dr | | 8,00,000 | |
> |   To Preference Share Capital A/c | | | 8,00,000 |
> | *(Application money transferred to capital)* | | | |
> | Preference Share Allotment A/c ........ Dr | | 6,00,000 | |
> |   To Preference Share Capital A/c | | | 6,00,000 |
> | *(Allotment money due on 1,00,000 shares @ ₹6)* | | | |
> | Bank A/c ................................ Dr | | 6,00,000 | |
> |   To Preference Share Allotment A/c | | | 6,00,000 |
> | *(Allotment money received)* | | | |
> | Preference Share First Call A/c ....... Dr | | 4,00,000 | |
> |   To Preference Share Capital A/c | | | 4,00,000 |
> | *(First call due on 1,00,000 shares @ ₹4)* | | | |
> | Bank A/c ................................ Dr | | 4,00,000 | |
> |   To Preference Share First Call A/c | | | 4,00,000 |
> | *(First call money received)* | | | |
> | Preference Share Final Call A/c ....... Dr | | 2,00,000 | |
> |   To Preference Share Capital A/c | | | 2,00,000 |
> | *(Final call due on 1,00,000 shares @ ₹2)* | | | | …

Term	Meaning
At par	Issue price equals the face (nominal) value
At premium	Issue price is more than the face value
At discount	Issue price is less than the face value
At loan	Not a mode of issuing shares at all
…

On application	₹ 8
On allotment	₹ 6
On first call	₹ 4
On final call	₹ 2
Company received application for all these shares and received all the money.
Pass journal entries in the books of Parimal Company Ltd.

Stage	Per share (₹)	Total (₹)
Application	8	8,00,000
Allotment	6	6,00,000
First call	4	4,00,000
Final call	2	2,00,000
Total	20	20,00,000

Particulars	Dr (₹)	Cr (₹)
Bank A/c ................................ Dr	8,00,000
To Preference Share Application A/c		8,00,000
(Application money received on 1,00,000 shares @ ₹8)
Preference Share Application A/c ...... Dr	8,00,000
To Preference Share Capital A/c		8,00,000
(Application money transferred to capital)
Preference Share Allotment A/c ........ Dr	6,00,000
To Preference Share Capital A/c		6,00,000
(Allotment money due on 1,00,000 shares @ ₹6)
Bank A/c ................................ Dr	6,00,000
To Preference Share Allotment A/c		6,00,000
(Allotment money received)
Preference Share First Call A/c ....... Dr	4,00,000
To Preference Share Capital A/c		4,00,000
(First call due on 1,00,000 shares @ ₹4)
Bank A/c ................................ Dr	4,00,000
To Preference Share First Call A/c		4,00,000
(First call money received)
Preference Share Final Call A/c ....... Dr	2,00,000
To Preference Share Capital A/c		2,00,000
(Final call due on 1,00,000 shares @ ₹2)

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