XYZ Traders Ltd issued 5,000 equity shares of ₹100 each at a premium of ₹20 per share, payable ₹30 on application, ₹60 on allotment (including the premium of ₹20 per share) and the balance of ₹30 on first and final call. All the shares were subscribed and all money was duly recei

Question

XYZ Traders Ltd issued 5,000 equity shares of ₹100 each at a premium of ₹20 per share, payable ₹30 on application, ₹60 on allotment (including the premium of ₹20 per share) and the balance of ₹30 on first and final call. All the shares were subscribed and all money was duly received. Pass the necessary journal entries.

Accepted Answer

**Step 1 — Application**

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Bank A/c Dr (5,000 × ₹30) | 1,50,000 | |
|   To Equity Share Application A/c | | 1,50,000 |
| Equity Share Application A/c Dr | 1,50,000 | |
|   To Equity Share Capital A/c | | 1,50,000 |

**Step 2 — Allotment (face value + premium)**

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Equity Share Allotment A/c Dr (5,000 × ₹60) | 3,00,000 | |
|   To Equity Share Capital A/c (5,000 × ₹40) | | 2,00,000 |
|   To Securities Premium A/c (5,000 × ₹20) | | 1,00,000 |
| *(Being allotment due, including premium of ₹20 per share)* | | |
| Bank A/c Dr | 3,00,000 | |
|   To Equity Share Allotment A/c | | 3,00,000 |

**Step 3 — First and final call**

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Equity Share First and Final Call A/c Dr (5,000 × ₹30) | 1,50,000 | |
|   To Equity Share Capital A/c | | 1,50,000 |
| Bank A/c Dr | 1,50,000 | |
|   To Equity Share First and Final Call A/c | | 1,50,000 |

**Cross-check:** total credited to Equity Share Capital = 1,50,000 + 2,00,000 + 1,50,000 = ₹5,00,000 = 5,000 shares × ₹100 face value ✓. Total credited to Securities Premium = ₹1,00,000 = 5,000 × ₹20 ✓. Total cash collected (30+60+30=120 per share × 5,000) = ₹6,00,000, which equals 5,00,000 + 1,00,000 ✓.

> [!ANSWER]
> Equity Share Capital Account = ₹5,00,000; Securities Premium Account = ₹1,00,000; total cash received = ₹6,00,000.

Particulars	Debit (₹)	Credit (₹)
Bank A/c Dr (5,000 × ₹30)	1,50,000
To Equity Share Application A/c		1,50,000
Equity Share Application A/c Dr	1,50,000
To Equity Share Capital A/c		1,50,000

Particulars	Debit (₹)	Credit (₹)
Equity Share Allotment A/c Dr (5,000 × ₹60)	3,00,000
To Equity Share Capital A/c (5,000 × ₹40)		2,00,000
To Securities Premium A/c (5,000 × ₹20)		1,00,000
(Being allotment due, including premium of ₹20 per share)
Bank A/c Dr	3,00,000
To Equity Share Allotment A/c		3,00,000

Particulars	Debit (₹)	Credit (₹)
Equity Share First and Final Call A/c Dr (5,000 × ₹30)	1,50,000
To Equity Share Capital A/c		1,50,000
Bank A/c Dr	1,50,000
To Equity Share First and Final Call A/c		1,50,000

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