Required: Journal entries for: (a) Share application. (b) Share allotment. (c) Share first and final call.

Steps to Solve

1. Calculate Total Application Money Received

   Since applications were received for 22,000 shares at Rs. 4 each, the total application money is calculated as: [ \text{Total Application Money} = 22,000 \times 4 = 88,000 ]

2. Determine the Allotment Summary

   The allotment of shares is as follows:

   • Full allotment for 12,000 shares.
   • 4,000 shares allotted from 8,000 applicants.
   • No allotment for 2,000 applicants.

   This sums to a total allotment of: [ \text{Total Alloted Shares} = 12,000 + 4,000 = 16,000 ]

3. Determine Excess Application Money

   The total excess application money will be the remaining amount after allotment. The total application money is Rs. 88,000, and for 16,000 shares, Rs. 3 is due on allotment. So, [ \text{Allotment Amount Due} = 16,000 \times 3 = 48,000 ] The excess will be: [ \text{Excess Application Money} = 88,000 - 48,000 = 40,000 ]

4. Journal Entry for Share Application

   The journal entry for share applications received will be: [ \text{Bank A/c} \quad 88,000 \quad \text{(To record application money received)} ] [ \text{Share Application A/c} \quad 88,000 ]

5. Journal Entry for Share Allotment

   The allotment journal entry will record the due amount: [ \text{Share Allotment A/c} \quad 48,000 \quad \text{(To record allotment money due)} ] [ \text{Bank A/c} \quad 8,000 \quad \text{(For excess of 4,000 shares)} ] (Adjusted from excess application) [ \text{Share Capital A/c} \quad 48,000 ]

6. Journal Entry for Share First and Final Call

   The call for outstanding shares will be recorded as: [ \text{Share First & Final Call A/c} \quad 48,000 \quad \text{(To record call due)} ] [ \text{Bank A/c} \quad 43,600 \quad \text{(For payments received)} ] [ \text{Share Capital A/c} \quad 48,000 ]