Unique Pictures Limited was registered with an authorised capital of ₹5,00,000 divided into 20,000, 5% preference shares of ₹10 each and 30,000 equity shares of ₹10 each. The company issued 10,000 preference and 15,000 equity shares for public subscription. Calls on shares were m

Question

Unique Pictures Limited was registered with an authorised capital of ₹5,00,000 divided into 20,000, 5% preference shares of ₹10 each and 30,000 equity shares of ₹10 each. The company issued 10,000 preference and 15,000 equity shares for public subscription. Calls on shares were made as under:

| Instalment | Equity Shares (₹) | Preference Shares (₹) |
|------------|-------------------|------------------------|
| Application | 2 | 2 |
| Allotment | 3 | 3 |
| First Call | 2.50 | 2.50 |
| Second and Final Call | 2.50 | 2.50 |

All these shares were fully subscribed. All the dues were received except the second and final call on 100 equity shares and on 200 preference shares. Record these transactions in the journal. You are also required to prepare the cash book and balance sheet.

Accepted Answer

> [!TLDR]
> Two classes of shares (5% preference and equity) are issued and fully subscribed. Every call is made in full on all subscribed shares; only the second and final call on 100 equity and 200 preference shares is unpaid → Calls in Arrears ₹750. The cash book and balance sheet both total ₹2,49,250.

### Concept
When calls are collected through the **bank**, the journal records only the amounts *becoming due* — application, allotment and each call — measured on the full subscribed shares (15,000 equity and 10,000 preference), together with the arrears; the actual cash movement is shown separately in the **cash book (bank column)**. Unpaid call money is debited to **Calls in Arrears**, which is later deducted from called-up capital in the balance sheet.

### Working Notes
- Application due: (15,000 + 10,000) shares × ₹2 → equity ₹30,000, preference ₹20,000.
- Allotment due: equity 15,000 × ₹3 = ₹45,000; preference 10,000 × ₹3 = ₹30,000.
- First call due: equity 15,000 × ₹2.50 = ₹37,500; preference 10,000 × ₹2.50 = ₹25,000.
- Second and final call due: equity ₹37,500; preference ₹25,000.
- Arrears on final call: equity 100 × ₹2.50 = ₹250; preference 200 × ₹2.50 = ₹500 → total ₹750.
- Cash on final call: equity ₹37,500 − ₹250 = ₹37,250; preference ₹25,000 − ₹500 = ₹24,500.

### Solution
**Books of Unique Pictures Limited — Journal**

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|------|-------------|------|-----------|------------|
| | Equity Share Application A/c Dr. | | 30,000 | |
| | 5% Preference Share Application A/c Dr. | | 20,000 | |
| | To Equity Share Capital A/c | | | 30,000 |
| | To 5% Preference Share Capital A/c | | | 20,000 |
| | *(Transfer of application money on 15,000 equity and 10,000 preference shares @ ₹2 each)* | | | |
| | Equity Share Allotment A/c Dr. | | 45,000 | |
| | 5% Preference Share Allotment A/c Dr. | | 30,000 | |
| | To Equity Share Capital A/c | | | 45,000 |
| | To 5% Preference Share Capital A/c | | | 30,000 |
| | *(Amo

Date	Particulars	Debit (₹)	Credit (₹)
	Bank A/c Dr.	40,000
	To Share Application A/c		40,000
(Being application money received on 10,000 shares @ ₹4 each)

Date	Particulars	Debit (₹)	Credit (₹)
	Bank A/c Dr.	60,000
	To Share Allotment A/c		60,000
(Being allotment money received)

Particulars	Note No.	Amount (₹)
1. Shareholders’ Funds
(a) Share Capital	1	1,00,000
(b) Reserves and Surplus	2	20,000
2. Non-Current Liabilities	...	...
3. Current Liabilities	...	...

Particulars	Amount (₹)
Authorised Capital
1,00,000 Equity Shares of ₹10 each	10,00,000
Issued Capital
80,000 Equity Shares of ₹10 each	8,00,000
Subscribed and Paid-up Capital
80,000 Equity Shares of ₹10 each fully paid	8,00,000

Receipts	Amount (₹)	Payments	Amount (₹)
To Equity Share Application A/c	30,000	By Balance c/d	2,49,250
To 5% Preference Share Application A/c	20,000
To Equity Share Allotment A/c	45,000
To 5% Preference Share Allotment A/c	30,000
To Equity Share First Call A/c	37,500
To 5% Preference Share First Call A/c	25,000
To Equity Share Second and Final Call A/c	37,250
To 5% Preference Share Second and Final Call A/c	24,500
Total	2,49,250	Total	2,49,250

Concept understanding — Share Capital Accounting

Why does share capital matter in accounting?

The precise meaning (NCERT Class 12)

Accounting treatment — the journal entries

Step 1: Application money received

Step 2: Transfer application money to Share Capital

Step 3: Allotment money due

Step 4: Allotment money received

The Balance Sheet format (as per NCERT)

Concept

Working Notes

Solution

Instalment	Equity Shares (₹)	Preference Shares (₹)
Application	2	2
Allotment	3	3
First Call	2.50	2.50
Second and Final Call	2.50	2.50

Date	Particulars	Debit (₹)	Credit (₹)
	Share Application A/c Dr.	40,000
	To Share Capital A/c		40,000
(Being application money transferred to Share Capital)

Date	Particulars	Debit (₹)	Credit (₹)
	Share Allotment A/c Dr.	60,000
	To Share Capital A/c		60,000
(Being allotment money due on 10,000 shares @ ₹6 each)

Particulars	Debit (₹)	Credit (₹)
Calls in Arrears A/c Dr.	750
To Equity Share Second and Final Call A/c		250
To 5% Preference Share Second and Final Call A/c		500

Particulars	Debit (₹)	Credit (₹)
Equity Share Application A/c Dr.	30,000
5% Preference Share Application A/c Dr.	20,000
To Equity Share Capital A/c		30,000
To 5% Preference Share Capital A/c		20,000
(Transfer of application money on 15,000 equity and 10,000 preference shares @ ₹2 each)
Equity Share Allotment A/c Dr.	45,000
5% Preference Share Allotment A/c Dr.	30,000
To Equity Share Capital A/c		45,000
To 5% Preference Share Capital A/c		30,000
(Amount due on allotment @ ₹3 each)
Equity Share First Call A/c Dr.	37,500
5% Preference Share First Call A/c Dr.	25,000
To Equity Share Capital A/c		37,500
To 5% Preference Share Capital A/c		25,000
(First call money due @ ₹2.50 each)
Equity Share Second and Final Call A/c Dr.	37,500
5% Preference Share Second and Final Call A/c Dr.	25,000
To Equity Share Capital A/c		37,500
To 5% Preference Share Capital A/c		25,000
(Second and final call money due @ ₹2.50 each)
Calls in Arrears A/c Dr.	750
To Equity Share Second and Final Call A/c		250
To 5% Preference Share Second and Final Call A/c		500
(Second and final call unpaid on 100 equity and 200 preference shares @ ₹2.50 each)

Concept

Working Notes

Solution

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