71201 Financial Accounting Assignment 2: Share & Consolidation Entries

This assignment solution presents detailed journal entries for share application, allotment, and consolidation accounting. It begins with the books of Hatwell Limited, detailing transactions related to share applications, allotments, calls, and forfeitures, including the associated debits and credits, and calculations for prorata allotments. The solution then moves to the books of Asterix Limited, providing consolidation journal entries, including dividend income, inventory adjustments, depreciation, deferred tax assets, and loan and interest reconciliation. It also includes the calculation of goodwill, providing insights into the consolidation process. The assignment also provides a detailed explanation of the application and allotment accounts and the consolidated worksheets, including their frequency of preparation and the key points when doing journals and worksheets.

In the books of Hatwell Limited
Journal Entries
$ $
Date Particulars Dr Cr
31-01-2018 Trust Bank A/c..Dr 11400000
To Share Application A/c 11400000
Computation
(300000*15+ 375000*10+
525000*6)
08-02-2018 Share Application A/c..Dr 6840000
To Share Capital A/c 4320000
To Share Allotment A/c 1620000
To Share First Call A/c 540000
To Share Second Call A/c 360000
Total Application Received :
12,00,000
Prorata Allotment
For 1 st Category
300000*3/5= 180000
Excess Money paid
Allotment = 4*180000= 7,20,000
First Call= 3* 180000= 5,40,000
Second Call= 2* 180000= 3,60,000
For 2nd Category
375000*3/5= 225000
Excess Money paid
Allotment = 4*225000= 9,00,000
For 3rd Category
525000*3/5= 315000
08-02-2018 Share Allotment A/c..Dr 2880000
To Share Capital A/c 2880000
11-02-2018 Share Application A/c..Dr 4560000
To Trust for Refund A/c 4560000
13-02-2018 Bank A/c….Dr 1260000
To Share Allotment A/c 1260000
(720000*4-16,20,000)

15-02-2018 Trust for Refund A/c..Dr 4560000
To Trust Bank A/c 4560000
18-02-2018 Bank A/c..Dr 6840000
To Trust Bank A/c 6840000
25-02-2018 Share First Call A/c..Dr 2160000
To Share Capital A/c 2160000
11-03-2018 Bank A/c..Dr 1596000
To Share First Call A/c 1596000
(720000-180000-8000)*3
16-03-2018 Share Second Call A/c..Dr 1440000
To Share Capital A/c 1440000
22-03-2018 Bank A/c..Dr 15000
To Share First Call A/c 15000
25-03-2018 Bank A/c..Dr 1074000
To Share Second Call A/c 1074000
(720000-180000-3000)*2
31-03-2018 Share Capital A/c..Dr 45000
To Share Forfeiture A/c 30000
To Share First call A/c 9000
To Share Second Call A/c 6000
19-04-2018 BanK A/c..Dr 39375
Forefeiture A/c..Dr 5625
To Share Capital A/c 45000
19-04-2018 Cost on issue of Share A/c..Dr 1000
To Bank A/c 1000
19-04-2018 Share Forfeiture A/c...Dr 1000
To Share reissue cost A/c. 1000
19-04-2018 Share Forfeiture A/c...Dr 23375

To Bank A/c 23375
Trust Bank A/c
Date Particulars Amount Date Particulars Amount
31-01-2018 Share Application A/c 11400000
15-02-2018 By Trust for Refund A/c 4560000
18-02-2018 By Bank A/c 6840000
11400000 11400000
Share Application A/c
Date Particulars Amount Date Particulars Amount
08-02-2018 To Share Capital A/c 4320000 31-01-2018 By Trust Bank A/c 11400000
To Share Allotment A/c 1620000
To Share First Call A/c 540000
To Share Second Call A/c 360000
11-02-2018 To Trust for Refund A/c 4560000
11400000 11400000
Share Allotment A/c
Date Particulars Amount Date Particulars Amount
08-02-2018 To Share capital A/c 2880000 08-02-2018 By Share Application A/c 1620000
13-02-2018 By Bank A/c 1260000
2880000 2880000
Bank A/c
Date Particulars Amount Date Particulars Amount
13-02-2018 To Share Allotment A/c 1260000 19-04-2018 By Share Reissue cost A/c 1000
18-02-2018 To Trust Bank A/c 6840000 19-04-2018 By Share Forfeiture A/c 23375
11-03-2018 To Share First Call A/c 1596000 19-04-2018 By Balance C/f 10800000
22-03-2018 To Share First Call A/c 15000
25-03-2018 To Share Second Call A/c 1074000
31-03-2018 To Share Capital A/c 39375
10824375 10824375
PART 2:
In the books of Asterix Limited
Consolidation Journal Entries
$ $

Date Particulars Dr Cr
Dividend Income .Dr 340000
To Dividend Paid (Subsidiary A/c)
34000
0
Consoldiated Profit and Loss A/c..Dr 56,250
To Inventory A/c 56,250
(375000-150000)/150000
150%
Profit on Stock
56,250
Deferred Tax Asset A/c..Dr 15750
To Profit and Loss A/c 15750
Consoldiated Profit and Loss A/c..Dr 50000
To Gain on sale of Machinery A/c 50000
Consoldiated Profit and Loss A/c..Dr 27500
To Depreciation 27500
Deferred Tax Asset A/c..Dr 6300
To Profit and Loss A/c 6300
Loan Payable A/c..Dr 75000
To Loan Receivabe A/c 75000
Interest Received A/c..Dr 3375
To Interest Paid A/c 3375
Consolidated Profit and Loss A/c 80550
To Impairment of Goodwill 80550
Depreciation for Equipment
01-01-2015 Cost of Equipment 250000
31-12-2015 Depreciation 50000
31-12-2016 Depreciation 50000
31-12-2017 Depreciation 50000
Value 100000
Sale 150000
Profit 50000
Depreciatio
n Charged
by Obelix
Limited
01-04-2018 Cost of Equipment 150000
Depreciation 22500
Depreciation to be charged 50000
Differential 27500

Computatio
n of
Goodwill
sl No Particular Amount
1 Purchase Consideration
350000
0
2 Share Capital
200000
0
3 Asset Valuation Reserve 150000
4 Retained Earnings 813000
5 Goodwill 537000