The Delhi Cloth Mills Ltd. invited application for 10,000 shares of 100 each at a premium of 10 each payable as follow : 50-on application, 35-on allotment (including premium) and 25-on call. Application for 15,000 shares were received. Applicants for 2,500 shares did not get any allotment and their money was returned.
Allotment was made pro-rata to the remaining applicants. Mr.A to whom 400 shares were allotted, failed to pay the amount due on allotment and call. His shares were forfeited and re-issued
at 105 per share. Show Cash Book and also prepare the Balance Sheet
To address the given scenario, we need to prepare the Cash Book for the Delhi Cloth Mills Ltd. and subsequently prepare a Balance Sheet. The transactions can be broken down into the following steps:
1. Application Money Received
2. Allotment Money Received
3. Forfeiture and Reissue of Shares
Let's go through each step and prepare the Cash Book accordingly:
Cash Book of Delhi Cloth Mills Ltd.
Date Particulars Dr. (₹) Cr. (₹)
Step 1: Application Money Received
- Date of Application Money Received: [Insert Date]
- Total Application Money Received: 15,000 shares * (₹50 + ₹10) = ₹900,000
Step 2: Allotment Money Received
- Date of Allotment Money Received: [Insert Date]
- Description: Allotment Money received for 10,000 shares @ ₹35 per share (including premium of ₹10 per share)
- Total Allotment Money Received: 10,000 shares * (₹35 + ₹10) = ₹450,000
Step 3: Forfeiture and Reissue of Shares
- Date of Share Forfeiture: [Insert Date]
- Description: Forfeiture of 400 shares allotted to Mr. A (₹85 per share + ₹10 premium)
- Total Forfeited Amount: 400 shares * (₹85 + ₹10) = ₹38,000
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