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Question 4

The document contains two questions related to share capital accounting. Question 4 asks about the nature of a Share Allotment Account, which is answered as an expense account. Question 5 provides details of a share issue by P Ltd and requires passing journal entries to record the issue. The summary of journal entries made are: (1) Receipt of application money is recorded by debiting Bank A/c and crediting Equity Shares Application A/c. (2) Allotment of shares is recorded by debiting Equity Shares Application A/c and crediting Equity Share Capital A/c. (3) Receipt of allotment money is recorded by debiting Bank A/c and crediting Equ

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13 views

Question 4

The document contains two questions related to share capital accounting. Question 4 asks about the nature of a Share Allotment Account, which is answered as an expense account. Question 5 provides details of a share issue by P Ltd and requires passing journal entries to record the issue. The summary of journal entries made are: (1) Receipt of application money is recorded by debiting Bank A/c and crediting Equity Shares Application A/c. (2) Allotment of shares is recorded by debiting Equity Shares Application A/c and crediting Equity Share Capital A/c. (3) Receipt of allotment money is recorded by debiting Bank A/c and crediting Equ

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Computer Project
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Question 4

Share Allotment Account is a,

 Expense a/c
 Liability a/c
 Asset a/c
 Income a/c
Answer: Expense a/c

Question 5

P Ltd. issued 50,000 equity shares of ₹. 10/- each at a premium of ₹. 2/- per share payable as
follows:

₹. 3/- on application

₹. 6/- on the allotment

₹. 3/- on the first and final call

All the shares were applied for and duly allotted. Pass necessary journal entries.

Solution:

In the Books of P Co. Ltd.

JOURNAL

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 1,50,000

To Equity shares application A/c 1,50,000

(Being the application money received on 50,000 equity shares at ₹.3/-


share)
Equity shares application A/c Dr. 1,50,000

To Equity share capital A/c 1,50,000

(Being the transfer of application money to the equity share capital a/c on
allotment)

Equity shares allotment A/c (50,000 X 6) Dr. 3,00,000

To Equity share capital A/c (50,000 X 4) 2,00,000

To Securities premium reserve A/c (50,000 X 2) 1,00,000

(Being the allotment money due)

Bank A/c Dr. 3,00,000

To Equity shares allotment A/c 3,00,000

Being the receipt of ₹. 6/- share on 50,000 equity shares)

Equity shares first and final call A/c Dr. 1,50,000

To Equity share capital A/c 1,50,000

(Being the amount due on 50,000 equity shares @ ₹. 3/- share)

Bank A/c Dr. 1,50,000

To Equity shares first and final call A/c 1,50,000


(Being the receipt of ₹.3/- share on 50,000 equity shares)

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