ACCOUNTING ENTRIES

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Question 1

Part 1

Journal Entries for NBS Ltd.

Date Particulars Amount (Dr.) Amount (Cr.)
01.10.2016 Bank A/c Dr. $23,00,000.00
To Share Application A/c $23,00,000.00
Refer Note-1

07.10.2016 Share Application A/c Dr. $23,00,000.00

To Share Capital A/c (250000 shares @$4) $10,00,000.00
To Share Allotment A/c $10,70,000.00
To Share Call A/c $1,50,000.00
To Bank A/c (20000 shares rejected@$4) $80,000.00
Refer Note-2

11.10.2016 Legal expenses Dr. $1,300.00

Share issue expenses Dr. $10,000.00
To Bank A/c $11,300.00

1.11.2016 Bank A/c Dr. $1,80,000.00

To Share Allotment A/c $1,80,000.00

1.11.2016 Share Allotment A/c Dr. $12,50,000.00

To Share Capital A/c (250000 shares @$5) $12,50,000.00

Share Call A/c Dr.

Bank A/c Dr.
To Share Capital A/c (250000 shares @$3) $7,50,000.00

Note-1
Computation of amount received on applications

Particulars Amount
50000 shares @ $12 $6,00,000.00
100000 shares @ $9 $9,00,000.00
200000 share @ $4 $8,00,000.00
Total amount received $23,00,000.00

Note-2
Apportionment of application money received
Total amount received $23,00,000.00
Amount apportioned on share application $10,00,000.00
(250000 share @ $ 4)
Amount of allotment received for 50000 shares @$5 $2,50,000.00
Amount of allotment received for 100000 shares @$5 $5,00,000.00
Excess amount of remaining shares 80000 @ $4 $3,20,000.00
Amount of call received for 50000 share @$3 $1,50,000.00
Amount refunded for rejected shares
20000 shares @$4 $80,000.00
Total amount received and apportioned $23,00,000.00

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 Part-2

Journal Entries for NBS Ltd.

Amount Amount
Date Particulars (Dr.) (Cr.)
01.07.2018 Bank A/c Dr. $5,55,000.00
Calls in advance A/c Dr. $1,50,000.00
To Share final Call A/c $7,05,000.00
[$3 received for 235000 shares (250000-15000)]

01.07.2018 Share final Call A/c Dr. $7,05,000.00

To Equity share capital A/c $7,05,000.00

10.08.2018 Equity share capital A/c (15000 shares@$12) Dr. $1,80,000.00

To Share final Call A/c (15000 shares @$3) $45,000.00
To Forfeited shares A/c $1,35,000.00

01.09.2018 Bank A/c (15000 shares @$10) Dr. $1,50,000.00

Forfeited shares A/c Dr. $30,000.00
To Equity share capital A/c $1,80,000.00
Gain on forfeiture 15000*9 = $135000
Loss on reissue 15000*($12-$10)= $30000
Net Gain $135000-$30000= $105000

01.09.2018 Share forfeiture and reissue expense A/c Dr. $800.00

To Bank A/c $800.00

01.09.2018 Forfeited shares A/c Dr. $1,05,000.00

To Forfeited share reserve A/c $1,05,000.00

31.10.2018 Bank A/c Dr. $2,50,000.00

To Preference share call A/c (50000 shares@$5) $2,50,000.00

31.10.2018 Preference share call A/c Dr. $2,50,000.00

To Preference share capital A/c $2,50,000.00

30.11.2018 Bank A/c Dr. $2,50,000.00

To Equity share application A/c $2,50,000.00
250000/10= 25000 shares@$10 per share

30.11.2018 Equity share application A/c Dr. $2,50,000.00

To Equity share capital A/c $2,50,000.00

20.12.2018 Bank A/c Dr. $1,00,000.00

To 7% Debentures A/c $1,00,000.00
Shareholders of 100000 shares accept the offer
of one 7% debenture for every 100 shares
No. of debentures=1000 (100000/100)
1000 debentures @$100

28.06.2019 Retained earnings A/c Dr. $1,25,000.00

To Dividend payable $1,25,000.00

Question-2

At 30 June,2019, the Equity of NBS Ltd. Consisted of the

following:

50000 preference shares issued at $10, $500000 $5,00,000.00

250000 ordinary shares issued at $12, $3000000 $30,00,000.00
25000 ordinary shares issued at $10, $250000 $2,50,000.00
Share issue costs -$800.00
Call in advance $0.00
Forfeited share reserve $1,05,000.00
Retained earnings -$16,00,000.00
Total equity $22,54,200.00

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