Question

Question 8

Taleb Cars Ltd. issued 5,000 shares of $ 30 each at a premium of $ 5 per share, payable as:

On application $ 12 (including $ 2 premium) per share

On allotment $ 13 (including $ 3 premium) per share

On first call $ 10 per share

Applications were received for 5,000 shares and allotment was made to all. Ameen, to whom 500 shares were allotted, failed to pay the calls.

The journal entries of allotment are:

A.

Particulares	Dr	Cr	Particulares	Dr	Cr
Bank             A/c                                              Share Allotment   A/c                   (Amount received for 5,000 shares)	65,000	65,000	Share Allotment A/c           Share Capital A/     Securities Premium A/c                  (Share allotment money transferred to share capital & securities Premium	65,000	50,000 15,000

B.

Particulares	Dr	Cr	Particulares	Dr	Cr
Share Capital              A/c                                               Share Allotment         A/c             Securities Premium a/c            (Share allotment money with premium amount Due)	65,000	50,000 15,000	Bank A/c                     Share Allotment A/C Securities Premium a/c	65,000	50,000 15,000

C.

Particulares	Dr	Cr	Particulares	Dr	Cr
Share Allotment         A/c                                               Share Capital                A/c             Securities Premium a/c            (Share allotment money with premium amount Due)	65,000	50,000 15,000	Bank A/c                     Share Allotment A/C               Amount received for 5,000 shares & with premium)	65,000	65,000

D.

Particulares	Dr	Cr	Particulares	Dr	Cr
Bank              A/c                                              Share Capital                A/c             Securities Premium a/c            (Share allotment money with premium amount Due)	65,000	50,000 15,000	Share Capital A/          Securities Premium A/c         Share Allotment A/c (Share allotment money transferred to share capital & securities Premium	50,000 15,000	65,000

Answer 1

Solution : Option C is the correct answer.

Journal entries to record the above transactions:

S.no	Particulars	Debit in $	Credit in $
1.	Share allotment account       Share Capital account       Securities premium account (Share allotment money with premium amount due)	$ 65,000	$ 50,000 (5000 shares*$10 per share) $ 15,000 (5000 shares *$ 3 per share)
2.	Bank account     Share allotment account (Amount received for 5000 shares &with premium )	$ 65,000	$ 65,000

Conclusion : From the above we can understand that OPTION C satisfies the given requirement in the question whereas remaining options A,B,D do not satisfy the given requirement in question.

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