TS Grewal Solution Class 12 Chapter 8 Company Accounts Accounting for Share Capital

 

 

According to Section 2(20) of the Companies Act, 2013, “Company means a company incorporated under this Act or any previous Companies Acts.” Company is an artificial person created by the process of law, having separate entity with perpetual succession. It may or may not have a common seal.

 

 

(i) Incorporation:- A company is an artificial person created through the process of law, i.e. the companies Act either under the present Companies Act, 2013 or under any previous Companies Acts.

(ii) Separate Legal Entity:- A company is an artificial person having a legal entity separate from its shareholders.

(iii) Artificial Person:- on the eyes of law it is artificial person. It can own property, enter into contract, conduct business, sue or be sued for its debts and actions.

 

 

According to Section 2(84) of the Companies Act, 2013, “Share means a share in the share capital of a company and includes stock.” Share Capital of a company is divided into units with a nominal value. Each of these small units is called a share.

 

 

Preference Shares are those shares which carry following two rights in preference to Equity Shares:

(i) As regards divided, they have preferential right of dividend to be paid as fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income tax, and

(ii) As regards capital, in the event of winding up, they have preferential right to be repaid the capital before it is repaid to Equity Shareholders.

 

 

Cumulative Preference Share are those Preference Shares which carry the right to receive arrears of dividend before dividend is paid to the Equity Shareholder.

 

 

According to Section 2(8) of the Companies Act, 2013, “Authorised Capital” or “Nominal Capital” means such capital as is authorised by the memorandum of a company to be the maximum share capital of the company.” It is the maximum amount which the company is, for the time being, authorised to raise.

 

 

According to Section 2(8) of the Companies Act, 2013, “Authorised Capital’ or ‘Nominal Capital’ means such capital as is authorised by the memorandum of a company to be the maximum share capital of the company.” It is the maximum amount which the company is, for the time being, authorised to raise.

 

 

‘Issued Capital’ means such capital which the company issues from time to time for subscription.

 

 

‘Subscribed Capital’ means such part of the capital which is for the time being subscribed by the members of a company.

 

 

 

Question 11. Differentiate between 'Called-up Share Capital' and 'Paid-up Share Capital.

 

 

Question 12. What is meant by Reserve Capital?

Reserve Capital is that part of the uncalled capital which the company, by passing a special resolution, may reserve to be called upon only on winding up of the company.

 

Question 13. Is 'Reserve Capital' a part of 'Unsubscribed Capital' or 'Uncalled Capital’?

Reserve Capital is included in uncalled Capital.

 

Question 14. What is meant by Capital Reserve?

Capital Reserve is a reserve created out of the profits of capital nature which are not available for distribution as dividend.

 

Question 15. What are Preliminary Expenses?

Preliminary expenses are those expenses which are incurred for incorporation of a company.

 

Question 16. What is the name given to the "part of capital" of a company which is called-up only on winding up?

"Part of capital" of a company which is called-up only on winding up of the company is known as “Reserve Capital”.

 

Question 17. What is meant by Allotment?

Share allotment is the creation and issuing of new shares, by a company. New shares can be issued to either new or existing shareholders. Share allotment can have implications for any existing shareholders share proportion. Typically, new shares are allotted to bring on new business partners.

 

Question 18. What is meant by pro rata allotment of shares?

Pro rata allotment of shares means allotment of shares in a fixed proportion. Pro rata allotment takes place only when the public issue of shares is oversubscribed.

 

Question 19. When does the need for a pro rata allotment arise?

Pro rata allotment of share means allotment of shares in a fixed proportion. Pro rata allotment takes place only when the public issue of share is oversubscribed.

 

Question 20. What is meant by Public subscription of shares?

Public issue of shares means an invitation by a company to public to subscribe the shares offered through a prospectus.

 

Question 21. What is meant by Private Placement of Shares?

Private Placement of Shares implies issue and allotment of shares to a select group of persons privately and not to public in general through public issue. In order to place the shares privately, a company must pass a special resolution to this effect.

Question 22. What is meant by Minimum Subscription?

Minimum Subscription (Section 39(1) of the Companies Act, 2013) means the amount which in the opinion of the Board of Directors of a company, must be received towards subscription of the issued share capital. As per the Guidelines of the Securities and Exchange Board of India (SEBI), a company must receive a minimum of 90% subscription of the Issued Share Capital before making, any allotment of shares or debentures to the public.

 

Question 23. What is meant by Securities Premium Reserve?

The excess of issue price over the nominal (face) value of a Share/Debenture is ‘Securities Premium’.

 

Question 24. State any one purpose for which Securities Premium Reserve Account can be utilised.

Purpose for Securities Premium Reserve Account can be utilised for issuing fully paid bonus shares to the members of the company.

 

Question 25. Name the head under which the Securities Premium Reserve Account will appear in the Balance Sheet.

Securities Premium Reserve Account and is shown in the Equity and Liabilities part of Balance Sheet under the head ‘Shareholders Funds’ and sub-head ‘Reserves and Surplus’ as Securities Premium Reserve.

 

Question 26. State the name of capital which refers to that amount which is stated in the Memorandum of Association as the share capital of the company.

‘Authorised Capital’ or ‘Nominal Capital’ is stated in the Memorandum of Association and is the maximum amount that a company can raise as share capital.

 

Question 27. What is meant by issue of shares for consideration other than cash?

When the company purchases some assets (including services) or purchases a running business, instead of making the payment to the vendor in cash, it issues its shares. Such issue of shares is termed as Issue of Shares of consideration other than cash.

 

Question 28. Give the meaning of oversubscription of shares.

Oversubscription of Shares means the number of shares applied for is more than the number of shares offered for subscription.

 

Question 29. Give any two alternatives available to a company for the allotment of shares in case of oversubscription.

(i)             To Make Pro-rata allotment to all the applicants.

(ii)            (a) Accepting some applications in full. (b) Allotting the remaining on pro rata basis.

 

Question 30. What is meant by under subscription of shares?

Under subscription of Shares means the number of shares applied for is less than the number of shares offered for subscription.

 

Question 31. What is meant by Call money?

After allotment of shares remaining part of share money, when called-up is called Call money. Call money may be called by the company to be paid by the shareholders in one or more instalments.

 

Question 32. Give the meaning of Calls-in-Arrears.

Calls-in-Arrears are that part of capital which has been called-up but has not yet been paid by the shareholders.

 

Question 33. How is Calls-in-Arrears shown in the Balance Sheet?

It is shown in the Note to Accounts on Share Capital under Subscribed Capital as follows:

Subscribed and fully paid-up:                                         Amount

1,40,000 Equity Shares of Rs. 10 each                             14,00,000

Subscribed but not fully paid-up:

10,000 Equity Shares of Rs. 10 each           1,00,000

Less: Calls-in-Arrears (10,000 × Rs. 2)          20,000             80,000

                                                                _____________________

                                                         Total                       14,80,000

                                                                                 ___________

 

Question 34. What is Calls-in-Advance?

Calls-in-Advance refers to the amount paid by shareholders in excess of the amount due from them.

 

Question 35. On 28th February, 2016 the first call of Rs. 2 per share became due on 50,000 Equity Shares allotted by Kumar Ltd. Komal, a holder of 1,000 shares, did not pay the first call money. Kovil, a holder of 750 shares, paid the second and final call of 4 per share along with the first call.

Pass the necessary Journal entry for the amount received by opening Calls-in-Arrears and Calls–in-Advance account in the books of the company.

 

Question 2. Distinguish between Equity Share and Preference Share.

Answer:

 

Question 3. Distinguish between Oversubscription and under subscription of shares issued by a company. How is Oversubscription dealt with?

Answer:

 

Question 4. What is securities premium reserve? State any three purposes for which securities premium reserve can be used.

Answer:

The Companies Act, 2013 (Section 52 (1)) prescribes that the amount of the premium received on securities be credited to Securities Premium Account, i.e., Securities Premium Reserve Account. Section 52(1) of the Companies Act, 2013 requires that the amount of premium received on securities to be credited to ‘Securities Premium Account’. Schedule III (Form of Balance Sheet) of the Companies Act, 2013 has given the head ‘Securities Premium Reserve’.

The use of the amount received as premium on securities for the following purposes:

1.)   Issuing fully paid bonus shares to the members.

2.)   Writing off Preliminary expenses of the company.

3.)   Writing off the expenses of, or the commission paid or discount allowed on any issue of securities or debentures of the company.

 

Question 5. State any three purposes other than 'Issue of bonus Shares' for which securities premium can be utilised.

Answer:

According to Section 52(2) of the Companies Act, 2013, Securities Premium can be applied for the following purposes:

(1)   Writing off preliminary expenses of the company,

(2)   Writing off the expenses or the commission paid on any issue of shares or debentures or discount allowed on issue of debentures of the company,

(3)   Providing for the premium payable on the redemption of redeemable preference shares or of debentures. 

 

Question 6. State any three purposes other than 'buy back of shares' for which securities premium can be utilised.

Answer:

According to Section 52(2) of the Companies Act, 2013, Securities Premium can be applied for the following purposes:

(1)   Issuing fully paid bonus to the shareholders.

(2)   Writing off preliminary expenses of the company.

(3)   Writing off the expenses or the commission paid on any issue of shares or debentures or discount allowed on issue of debentures of the company.

 

Question 7. Securities Premium can be utilised for three purposes besides (i) issuing fully paid bonus shares' and (ii) Buy back of shares! State those purposes.

Answer:

When shares are issued at a price higher than the nominal (face) value, it is called issue of shares at premium. Excess of issue price over the nominal (face) value is the amount of premium (Securities Premium). It is a capital profit for the company and the amount so received is credited to a separate account called Securities Premium Reserve Account.

According to Section 52(2) of the Companies Act, 2013, Securities Premium can be applied for the following purposes:

(1)   Writing off preliminary expenses of the company.

(2)   Writing off the expenses or the commission paid on any issue of shares or debentures or discount allowed on issue of debentures of the company.

(3)   Providing for the premium payable on the redemption of redeemable preference shares or of debentures.

 

Question 8. Can Securities Premium Reserve be utilised for the purchase of fixed assets? Give reasons.

Answer:

No, According to Section 52(2) of the Companies Act, 2013, Securities Premium can be applied for the following purposes:

(1)   Writing off preliminary expenses of the company.

(2)   Writing off the expenses or the commission paid on any issue of shares or debentures or discount allowed on issue of debentures of the company.

(3)   Providing for the premium payable on the redemption of redeemable preference shares or of debentures.

(4)   Issuing fully paid bonus shares to the members.

(5)   Purchasing its own shares.

 

Question 9. How is Share Capital shown in the Balance Sheet of a Company?

Answer:

Balance Sheet of a company is prepared in the form prescribed in Part I of Schedule III of the Companies Act, 2013. It required a Company to show

(i)  Authorised Capital

(ii)  Issued Capital

(iii)  Subscribed Capital

 

(i)   Authorised Capital or Nominal Capital:- ‘Authorised Capital’ or ‘Nominal Capital’ means such capital as is authorised by the Memorandum of a company to be maximum amount of share capital of a company.

‘Authorised Capital’ or ‘Nominal Capital’ is stated in the Memorandum of Association and is the maximum amount that a company can raise as share capital.

It is stated separately for each class or kind of shares, i.e., Preference Shares and Equity Shares and is the maximum amount of shares capital under each class or kind of shares which a company can issue for subscription. Authorised Share Capital under each class or kind (Equity or Preference) may be more or equal to the issued share capital, but cannot be less than the issued capital.

 

(ii) Issued Capital:- ‘Issued Capital’ means such capital as the company issues from time to time for subscription. Issued Capital is a part of Authorised Capital that is issued for subscription. It includes besides shares issued for subscription, shares allotted for consideration other than cash, shares subscribed by signatories to the Memorandum of Association and shares taken by directors as qualifying shares. It should be kept in mind that issued capital cannot exceed the company’s Authorised Share Capital.

 

(iii)  Subscribed Capital:- ‘Subscribed Capital’ means such part of the capital which is for the time being subscribed by the members of a company. Subscribed Capital is a part of issued capital which the company has issued for cash or for consideration other than cash. It includes shares issued for subscription and subscribed, shares subscribed by signatories to the Memorandum of Association, shares subscribed by the directors as qualifying shares and shares allotted for consideration other than cash.

 

Question 10. Can forfeited shares be reissued? If so, at what terms?

Answer:

Yes, forfeited shares are reissued. Reissue of forfeited shares means selling the shares that were cancelled by the company. These shares may be reissued or sold by the company on the terms as it may decide. Thus, forfeited shares may be reissued by the company at par, at premium or at discount. However, if forfeited shares are reissued at discount, the amount of discount allowed on reissued of forfeited shares should not exceed the amount forfeited on reissued shares.

Maximum Permissible Discount on Reissue of Forfeited Shares:- Maximum discount that can be allowed on reissued of forfeited shares is the amount forfeited, i.e. the amount credited to the forfeited shares. In other words, reissue price cannot be less than the amount unpaid on forfeited shares.

Transfer of Balance in Forfeited Shares Account

When forfeited shares are reissued, one of the following two situations arises:

(1)   All forfeited shares are reissued

(2)   All forfeited shares are not reissued.

 

Question 11. Distinguish between Calls-in-Arrears and Calls-in-Advance.

Answer:

Exercise  ::------>

 

Question 1:  Gopal Ltd. was registered with an authorized capital of 50,00,000 divided into Equity Shares of 100 each. The company offered for public subscription all the shares. Public applied for 45,000 shares and allotment was made to all the applicants. All the calls were made and were duly received except the final call of 20 per share on 500 shares.

Prepare the Balance Sheet of the company showing the different types of share capital.

Answer 1:

Balance Sheet of Gopal ltd. as per Schedule VI part I of the Companies act 1956 as at date:

 

 

Question 3:  Lennova Ltd. has authorised share capital of Rs. 1,00,00,000 divided into 1,00,000 Equity Shares of Rs. 100 each. It has existing issued and paid up capital of Rs. 25,00,000. It further issued to public 25,000 Equity Shares at a premium of 20% for subscription payable as under:

Show share capital of the company in the Balance Sheet of the Company.The issue was fully subscribed and allotment was made to all the applicants. The company did not make the call during the year. 

Answer 3:

 

Question 4:  Star Ltd. is registered with capital of Rs. 50,00,000 divided into 50,000 equity shares of Rs. 100 each, The Company issued 25,000 equity shares for subscription. Subscription was received for 23,750 shares and all the due amount was duly received, except the first and final call of Rs. 20 per share on 600 shares. Show the 'Share Capital' in the Balance Sheet of the company.

Answer  4:

 

Issue of Shares for Cash at Par

Question 5:  Moneyplus company issued 2,50,000 Equity Shares of Rs. 10 each to public. All amounts have been received in lump sum. Pass necessary Journal entries in the books of the company. 

Answer  5:

Point of Knowledge:-

Authorized Capital 2,50,000 equity shares @ Rs 10 each

Issued and Subscribed Share = 2,50,000 × 10 = Rs. 25,00,000

 

Question 6:  The authorized capital of Rs. 16,00,000 of Bharat Ltd. is divide into 1,60,000 Equity Shares of Rs. 10 each. Out of these shares, 80,000 Equity Shares were issued at par to public for subscription. The full nominal value is payable on application. All the shares were subscribed by the public and total amount was paid for. Pass necessary journal entries in the books of the company.

Answer 6:

Point of Knowledge:-

Authorized Capital 1,60,000 equity shares of Rs. 10 each

Issued and Subscribed Share = 80,000 × 10 = Rs. 8,00,000

 

Question 7:  Hema Ltd. invited applications for 10,000 shares of Rs. 100 each payable as follows:

Rs. 20 on application, Rs. 30 on allotment, Rs. 20 on first call and the balance on final call.

All the shares were applied and allotted. All the money was duly received.

You are required to journalize these transactions. 

Answer 7:

Issued and Subscribed Capital 10,000 shares of Rs. 100 each 

 

Question 8:  Marigold Ltd. was registered with the authorized capital of Rs. 3,00,000 divided into 3,000 shares of Rs. 100 each, which were offered to the public. Amount payable as Rs. 30 per share on application, Rs. 40 per share on allotment and Rs. 30 per share on first and final call. These shares were fully subscribed and all money was dully received. Prepare journal and Cash Book.

Answer 8:

 

Question 9:  Modern Marbles Ltd. was registered with an authorised capital of Rs.10,00,000 divided into 7,500 Equity Shares of Rs.  100 each and, 2,500 Preference Shares of Rs.100 each. 1,000 Equity Shares and 500; 9% Preference Shares were offered to public on the following terms – Equity Shares payable Rs.10 on application, Rs.40 on allotment and the balance in two calls of Rs.  25 each. Preference Shares are payable Rs. 25 on application, Rs. 25 on allotment and Rs.50 on first and final call. All the shares were applied for and allotted. Amount due was duly received. Prepare Cash Book and pass necessary Journal entries to record the above issue of shares and show how the Share Capital will appear in the Balance Sheet.

Answer 9:

 

Issue of Shares for Cash at Premium

 

Question 10:  Shiva Ltd. issued 1,00,000 Equity Shares of Rs. 10 each at a premium of Rs. 5 per share . The whole amount was payable on application. The issue was fully subscribed. Pass necessary Journal entries.

Answer  10:

Point of Knowledge: 

Issued 1,00,000 equity shares of Rs. 10 each at a premium of Rs. 5

Applied 1,00,000 shares.

Total Application money = 1,00,000 × (10+5) = Rs. 15,00,000

 

Question 11:   Seema Ltd. offered for subscription 10,000 shares of Rs. 25 each, payable Rs. 5 per share on application, Rs. 10 per share on allotment (including Rs. 5 per share as premium), Rs. 5 per share as first call on the shares and the balance in two equal amounts at intervals of three months. All the shares were applied for and allotted. All the money was received except the second call and final call on 200 and 400 shares respectively.

Pass the entries in the company's Journal, Cash Book and the ledger. Also show the company's Balance Sheet on completion of the above transactions.

Answer 11:

 

Question 12:  Bharat Ltd. was incorporated with a capital of Rs. 2,00,000 divided into shares of Rs. 10 each. 2,000 shares were offered for subscription and out of these, 1,800 shares were applied for and allotted. Rs. 3 per share (including Rs. 1 premium) was payable on application, Rs. 4 per share (including Rs. 1 premium) on allotment, Rs. 2 per share on first call and Rs. 3 per share on final call. All the money was received. Give necessary Journal entries and show share capital in the Balance Sheet.

Answer 12:

 

Question 13:  Authorized capital of Suhani Ltd. is Rs. 45,00,000 divided into 30,000 shares of Rs. 150 each. Out of these company issued 15,000 shares of Rs. 150 each at a premium of Rs. 10 per share. The amount was payable as follows: Rs. 50 per share on application , Rs. 40 per share on allotment (including premium ), Rs. 30 per share on first call and balance on final call. Public applied for 14,000 shares.  All the money was duly received. Prepare an extract of Balance Sheet of Suhani Ltd. as per Schedule III, Part I of the companies Act, 2013 disclosing the above information. Also prepare 'Notes to Accounts ' for the same.

Answer 13:

 

Oversubscription

 

Question 14:  A company invited applications for 75,000 equity shares of Rs. 100 each. The application money received @ Rs. 30 per share was Rs. 27,00,000. Name the kind of subscription. List the three alternatives for allotting these shares. 

Answer 14:

Point of Knowledge:-

In case of oversubscription Share Application Money, on allotment, is transferred to Share Capital Account for the allotted shares. The balance application money, if any, is adjusted as follows:

1. Application money is refunded to applicants to whom no allotment is made.
2. If partial allotment is made, surplus of application money is adjusted towards ‘shares allotment money’ or ‘call money’ due, if the question so requires. The balance, if any, is refunded to the applicants.
3. Since the total amount is receivable on application so the excess money on 2,000 shares has been refunded.

 

Question 16:  Citizen Watches Ltd. invited applications for 50,000 shares of Rs. 10 each payable Rs. 3 on application, Rs. 4 on allotment and balance on first and final call. Applications were received for 60,000 shares. Applications were accepted for 50,000 shares and remaining applications were rejected. All calls were made and received except First and Final call on 500 shares.

Pass the journal entries in the books of Citizen Watches Ltd.

Answer 16:

 

Question 17:   Arti Ltd. offered for subscription 20,000 shares of Rs. 10 each payable Rs. 3 on application, Rs. 5 on allotment and balance on first and final call. Applications were received for 30,000 shares. Letters of regret were issued to applicants for 5,000 shares and their application money was refunded. Application money for other 5,000 shares was applied towards the payment for allotment money. The balance of allotment money was also received in due time. Company didn't make first and final call.

You are to prepare the Journal, Cash Book, and Ledger Accounts and show 'Share Capital' in the Balance Sheet of the company.

Answer 17:

 

 

 

Question 21:  Sony Media Ltd. issued 50,000 shares of Rs. 10 each payable Rs. 3 on application, Rs. 4 on allotment and balance on first and final call. Applications were received for 1,00,000 shares and allotment was made as follows:

(i) Applicants for 60,000 shares were allotted 30,000 shares,

(ii) Applicants for 40,000 shares were allotted 20,000 shares, Anupam to whom 1,000 shares were allotted from category (i) failed to pay the allotment money. Pass journal entries up to allotment.

Answer 21:

 

Under-subscription

 

Question 22:  The Kalyan Cotton Mills Ltd.was registered on 1st January, 2011 with a capital of Rs.10,00,000 divided into 1,00,000 shares of Rs. 10 each . The company issued 42,000 shares of which 40,000 shares were taken up by the public and Rs. 1 per share was received with application. On 1st February, these shares were allotted and Rs. 2 per share was duly received on 28th February as allotment money. A first call of Rs. 3 per share was made on 1st March and the call money on all shares with the exception of 100 shares was received. The final call of Rs. 4 per share was made on 1st June and the amount due, with the exception of 400 shares, was received by 30th June. Pass necessary journal and Cash Book entries and prepare the Balance Sheet as at 30th June, 2011.

Answer 22:

Point of Knowledge:- 

Authorised Capital 1,00,000 shares of Rs. 10 each

Issued Capital 42,000 shares of Rs 10 each

Applied 40,000 shares

Payable as:

Rs 1 on application

Rs 2 on allotment

Rs 3 on first call

Rs 4 on final call

 

 

Calls-in-Arrears and Calls-in-Advance

 

Question 23:  Ghosh Ltd. made the second and final call on its 50,000 Equity Shares @ Rs. 2 per share on 1st January, 2016. The entire amount was received on 15th January, 2016 except on 100 shares allotted to Venkat. Pass necessary journal entries for the call money due and received by opening Calls-in-Arrears Account.

Answer  23:

 

Question 24:   Star Ltd was registered with a capital of Rs. 5,00,000 in shares of Rs. 10 each and issued 20,000 such shares at a premium of Rs. 2 per share, payable as Rs. 2 per share on application, Rs. 5 per share on allotment (including premium) and Rs. 2 per share on first call made three months later. All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares and another shareholder holding 1,000 shares failed to pay the first call money.

Pass journal entries to record the above transactions and show how they will appear in the company's Balance Sheet.

Answer 24:

 

Question 25:   Green Ltd. issued 8,000 Equity Shares of Rs. 10 each. Rs. 5 per share was called, payable Rs. 2 on application, Rs. 1 on allotment, Rs. 1 on first call and Rs. 1 on second call. All the money was duly received with the following exceptions:

A who holds 250 shares paid nothing after application.

B who holds 500 shares paid nothing after allotment.

C who holds 1,250 shares paid nothing after first call.

Prepare Journal and the Balance Sheet. 

Answer 25:

Issued Capital 5,000 Shares of Rs.10 each Rs. 5 called up

 

Question 26:   Bharat Ltd made the first call of Rs. 2 per share on its 1,00,000 Equity Shares on 1st March , 2006. Ashok, a shareholder, holding 800 shares paid the second and final call amount along with the first call money. The second and final call amount was Rs. 3 per share. Pass necessary journal entries for recording  the above using the Calls-in Advance Account.

Answer  26:

 

Question 27:  2,000 Equity Shares of Rs. 10 each were issued to Limited from whom assets of Rs. 25,000 were acquired. Pass Journal entry.

Answer  27:

 

Question 28:  'Amrit Dhara Ltd.' issued 800 Equity Shares of Rs. 100 each at a premium of 25% as fully paid-up in consideration of the purchase of plant and machinery of Rs. 1,00,000.

Pass entries in company's Journal.

Answer  28:

 

Question 29:   Rajan Ltd. purchased assets from Geeta & Co. for Rs. 5,00,000. A sum of Rs. 1,00,000 was paid by means of a bank draft and for the balance due Rajan Ltd. issued equity Shares of Rs. 10 each at a premium of 25%. Journalize the above transactions in the books of the company.

Answer  29:

 

Question 30:  Z Ltd. purchased furniture costing Rs. 2,20,000 from C.D Ltd. The payment was to be made by issue of 9% Preference Shares of Rs. 100 each at premium of Rs. 10 per share. Pass necessary Journal entries in the books of Z Ltd.

Answer  30:

 

Question 31:  Goodluck Ltd purchased  machinery costing Rs. 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity Shares of Rs. 10 each at a premium of 25%.

Pass necessary Journal entries for the above transactions in the books of Goodluck Ltd. 

Answer  31:

 

Question 32:  Jain Ltd. purchased machinery costing Rs. 10,00,000 from Ayer Ltd. 50% of the payment was made by cheque and for the remaining 50%, the company issued Equity Shares of Rs. 100 each at a premium of 25%. Pass necessary Journal entries in the books of Jain Ltd. for the above transaction.

Answer  32:

 

Question 33: Sona Ltd.  Purchased machinery costing Rs. 17,00,000 from Mona Ltd. Sona Ltd. paid 20% of the amount by cheque and for the balance amount issued Equity Shares of Rs. 100 each at a premium of 25%. Pass necessary Journal entries for the above transactions in the books of Sona Ltd .Show your Point of Knowledge clearly.

Answer 33:

 

Question 34: Light Lamps Ltd. issued 50,000 shares of Rs. 10 each as fully paid-up to the promoters for their services to set-up the company. It also issued 2,000 shares of Rs. 10 each credited as fully paid-up to the underwriters of shares for their services. Journalize these transactions.

Answer 34:

 

Question 35: Bharat Lamp Ltd. issued 30,000 fully paid-up shares of Rs. 100 each for purchase of the following assets and liabilities from Sharma & Co:
Plant Rs. 7,00,000 Stock-in-Trade Rs. 9,00,000
Land and Building Rs. 12,00,000 Sundry Creditors Rs. 2,00,000
You are required to pass necessary Journal entries.

Answer 35:

 

Question 36: Sure Ltd. purchased a running business from M/s. Rai Brothers for a sum of Rs. 15,00,000 payable Rs. 12,00,000 in fully paid shares of Rs. 10 each and balance through cheque.
The assets and liabilities consisted of the following:
Plant and Machinery  Rs. 4,00,000     Stock                      Rs. 4,00,000
Building                      Rs. 4,00,000     Cash                        Rs. 3,00,000
Sundry Debtors         Rs. 3,00,000     Sundry Creditors   Rs. 2,00,000
You are required to pass necessary Journal entries in the company's books.

Answer 36:

 

Question 37: Sandesh Ltd. took over the assets of Rs. 7,00,000 and liabilities of Rs. 2,00,000 from Sanchar Ltd. for a purchase consideration of Rs. 4,59,500. Rs. 8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of Rs. 10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.

Answer 37:

Point of Knowledge:-

Number of Equity Shares to be issued Sona Ltd. = Rs. 4,51,000/10+1 = 41,000 Equity Shares

 

Question 38: Better Prospect Ltd. acquired land costing Rs. 1,00,000 and in payment allotted 1,000 Equity Shares of Rs. 100 each as fully paid. Further, the company issued 4,000 Equity Shares to public. The shares were payable as: Rs. 30 on application; Rs. 30 on allotment; Rs. 40 on first and final call. Applications were received for all shares which were allotted. All the money was received except the call on 200 shares. Pass journal entries and prepare Balance Sheet of the company.

Answer 38:

Question 39: Alankrit Ltd. purchased machinery of Rs. 10,00,000 from Grand Iron Works Ltd. and paid as follows:
(a) Issued 50,000 Equity Shares of Rs. 10 each at a premium of Rs. 2.
(b) Gave an acceptance of Rs. 3,00,000 payable after 3 months; and
(c) Balance by issuing post-dated cheque of two months of Rs. 1,00,000.
Pass the Journal entries in the books of Alankrit Ltd. and Grand Iron Works Ltd.

Answer 39:

 

Question 40: Alpha Ltd. issued 20,000 Equity Shares of Rs. 10 each at par payable: On application Rs. 2 per share; on allotment Rs. 3 per share; on first call Rs. 3 per share; on second and final call Rs. 2 per share. Mr. Gupta was allotted 100 shares. Pass necessary Journal entry relating to the forfeiture of shares in each of the following alternative cases:
Case I If Mr. Gupta failed to pay the allotment money and his shares were immediately forfeited.
Case II If Mr. Gupta failed to pay allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Case III If Mr. Gupta failed to pay the first call and on his subsequent failure to pay the second and final call, his shares were forfeited.

Answer 40:

 

Question 41: Ankit Ltd. issued 20,000 equity shares of 10 each at a premium of Rs. 2 per share, payable as:
On Application :  Rs. 3
On Allotment :    Rs. 5 (including premium)
On First Call :     Rs. 2
On Second and Final Call : Rs. 2
Vijay was allotted 500 shares. Pass the necessary Journal entries relating to the forfeiture of shares in following cases.
Case I Vijay did not pay allotment money and his shares were immediately forfeited.
Case II Vijay did not pay allotment and first call, his shares were forfeited after first call.
Case III Vijay failed to pay first call and his shares were forfeited immediately.
Case IV Vijay failed to pay both the calls and his shares were forfeited.

Answer 41:

Point of Knowledge:-

Section 43 of the Companies Act, 2013 prescribes that Shares Capital of a company broadly can be of two types or classes-
1.) Preference Share
2.) Equity Shares

 

Question 42: U.P. Sugar Works Ltd. was registered on 1st January, 2019 with an authorised capital of Rs. 15,00,000 divided into 15,000 shares of Rs. 100 each. The company issued on 1st April, 2019, 5,000 shares of Rs. 100 each at a premium of Rs. 5 per share payable Rs. 25 per share on application, Rs. 30 (including premium) on allotment and the balance in two equal installments of Rs. 25 each on 1st July and 1st October respectively. All the allotments and call moneys were paid when due, except in case of one shareholder who failed to pay the final call on 100 shares held by him. His shares were forfeited on 1st November after giving him a due notice. Show necessary entries in the books of the company to record these transactions.

Answer 42:

 

Question 43: Black Stone Ltd. issued 10,000 Equity Shares of Rs. 10 each at a premium of Rs. 3 per share payable Rs. 5 on application, Rs. 5 (including premium) on allotment and the balance on first call. All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received.
Pass necessary Journal entries to record the above.

Answer 43:

 

Question 44: A company issued 10,000 shares of the value of Rs. 10 each, payable Rs. 3 on application, Rs. 3 on allotment and Rs. 4 on the first and final call . All amounts are duly received except the call money on 100 shares. These shares are subsequently forfeited by Directors and are resold as fully paid-up for Rs. 500. Give necessary journal entries for the transactions.

Answer 44:

Point of Knowledge:-
Reserve Capital and Capital Reserve are two different terms.
Reserve Capital is part of Share Capital that a company resolves not to call except in the event of it being wound up. Capital Reserve is a reserve, which is created out of capital profits and is not free for distribution as dividend.

 

Question 45: X Ltd. forfeited 900 Equity Shares of Rs. 100 each for the non-payment of allotment money of Rs. 30 per share and the first call of Rs. 20 per share. The second and final call of Rs. 25 per share has not been made. The forfeited shares were reissued for Rs. 90 per share, Rs. 75 paid-up. Journalize the above.

Answer 45:

 

Question 46: The Directors of M Ltd resolved on 1st May, 2015 that 2,000 Equity Shares of Rs. 10 each, Rs. 7.50 paid be forfeited for non-payment of final call of Rs. 2.50. On 10th June, 2015, 1,800 of these shares were reissued for Rs. 6 per share. Give necessary Journal entries.

Answer 46:

 

Question 47: Super Star Ltd. makes an issue of 10,000 Equity Shares of Rs. 100 each, payable as:
On application and allotment    Rs. 50 per share,
On first call                                 Rs. 25 per share,
On second and final call           Rs. 25 per share.
Members holding 400 shares did not pay the second and final call and the shares are duly forfeited, 200 of which are reissued as fully paid-up @Rs. 50 per share. Pass journal entries in the books of the company.

Answer 47:

 

Question 48: Sunshine Ltd. issued 20,000 shares of Rs. 100 each payable Rs. 25 per share on application, Rs. 25 per share on allotment and the balance in two calls of Rs. 25 each. The company did not make the final call of Rs. 25 per share. All the money was duly received with the exception of the amount due on the first call on 400 shares held by Mr. Modi. The Board of Directors forfeited these shares and subsequently reissued them @ Rs. 75 per share paid-up for a sum of Rs. 28,000. Journalize the above transactions and prepare Share Capital Account.

Answer 48:

 

Question 49: The Hindustan Manufacturing Ltd. had a total subscribed capital of Rs. 10,00,000 in Equity Shares of Rs. 10 each of which Rs. 7.50 were called-up. A final call of Rs. 2.50 was made and all amount paid except two calls of Rs. 2.50 each in respect of 100 shares held by D. These shares were forfeited and reissued at Rs. 8 per share. Pass necessary journal entries (including that of cash) to record the transactions of final call, forfeiture of shares and reissue of forfeited shares. Also, prepare the Balance Sheet of the company.

Answer 49:

 

Question 50: On 1st May,2014, Directors of a Limited Company forfeited 200 shares of Rs. 20 each, Rs. 15 per share called-up, on which Rs. 10 per share has been paid by A , the amount of the first call of Rs. 5 per share being unpaid. Ten days later, the Directors reissued the forfeited shares to B credited as Rs. 15 per share paid-up, for a payment of Rs. 10 per share.
Give journal entries in the company's books to record the forfeited shares and their reissue.

Answer 50:

 

Question 51: X Ltd. forfeited 100 shares of Rs. 10 each (Rs. 8 called-up) issued at a premium of Rs. 2 per share to Mr. R, on which he had paid applications money of Rs. 5 per share , for non-payment of allotment money of Rs. 5 per share (including premium). Out of these, 70 shares were reissued to Mr . Sanjay as Rs. 8 called-up for Rs. 7 per share. Give necessary journal entries relating to forfeiture and reissue of shares.

Answer 51:

 

Question 52: Bee Ltd. Company forfeited 100 Equity Shares of the face value of Rs. 10 each, Rs. 6 per share called-up, for non-payment of first call of Rs. 2 per share. The forfeited shares were subsequently reissued as fully paid-up @ Rs. 7 each. Give necessary entries in the company's Journal.

Answer 52:

 

Question 53: Give necessary journal entries:
(i) The Directors of Devendra Ltd. resolved on 1st January, 2010 that Equity Shares of Rs. 10 each, Rs. 8 paid up be forfeited for non-payment of final call of Rs. 2. On 1st February, 60 of these shares were reissued @ Rs. 7 per share as fully paid-up.
(ii) Virender Limited forfeited 20 shares of Rs. 100 each (Rs. 60 called-up) issued at par to Mukesh on which he had paid Rs. 20 per share. Out of these, 15 shares were reissued to Sanjeev as Rs. 60 paid-up for Rs. 45 per share.

Answer 53:

Question 54: Show the forfeiture and reissue entries under each of the following cases:
(i) X Ltd. forfeited 300 shares of Rs. 10 each, Rs. 8 called-up held by Mr. A for non-payment of second call money of Rs. 3 per share. These shares were reissued to Mr. Z for Rs. 10 per share as fully paid-up.
(ii) Y Ltd. forfeited 400 shares of Rs. 10 each, fully called-up, held by Mr. B for non-payment of final call money of Rs. 4 per share. These shares were reissued to Mr. Tat Rs. 12 per share as fully paid-up.
(iii) Light Ltd. forfeited 250 shares of Rs. 10 each, fully called-up held by Mr. C for non-payment of allotment money of Rs. 3 per share and first and final call money of Rs. 4 per share. These shares were reissued @ Rs. 8 per share as fully paid-up to Mr. P.

Answer 54:

 

Question 55: Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) Basak Ltd. forfeited 20 shares of Rs. 10 each, Rs. 7 called-up on which the shareholder had paid application and allotment money of Rs. 5 per share. Out of these, 15 shares were reissued to Naresh as Rs. 7 per share paid-up for Rs. 8 per share.
(ii) Y Ltd. forfeited 90 shares of Rs. 10 each, Rs. 8 called-up issued at a premium of Rs. 2 per share to 'R' for non-payment of allotment money of Rs. 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as Rs. 8 called-up for Rs. 10 per share.

Answer 55:

 

Question 56: Star Ltd. forfeited 500 Equity Shares of Rs. 100 each for non-payment of first call of Rs. 30 per share. The final call of Rs. 10 per share was not yet made. Out of these, 60% shares were reissued for Rs. 39,000 fully paid. Journalize the forfeiture and reissue of shares.

Answer 56:

 

Question 57: A holds 100 shares of Rs. 10 each on which he has paid Rs. 1 per share on application. B holds 200 shares of Rs. 10 each on which he has paid Rs. 1 and Rs. 2 per share on application and allotment respectively. C holds 300 shares of Rs. 10 each and has paid Rs. 1 on application, Rs. 2 on allotment and Rs. 3 on first call. They all fail to pay their arrears and the second call of Rs. 2 per share. Shares are forfeited and subsequently reissued @ Rs. 11 per share as fully paid-up. Journalize the above.

Answer 57:

 

Question 58: Software Ltd. company with registered capital of Rs. 5,00,000 in shares of Rs. 10 each issued 20,000 of such shares payable Rs. 2 on application, Rs. 4 on allotment, Rs. 2 on first call Rs. 2 on final call. All the money payable on allotment was duly received but on the first call being made, one shareholder paid the entire balance on his holding of 300 shares and five shareholders with a total holding of 1,000 shares failed to pay their dues on the first call. These shares were forfeited for non-payment of first call money. Final call was made and all the money due was received. Later on, forfeited shares were reissued @ Rs. 6 per share as fully paid up. Record the above in the company's Journal and prepare the Balance Sheet.

Answer 58:

 

Question 59: New Company Ltd. has a nominal capital of Rs. 2,50,000 in shares of Rs. 10. Of these, 4,000 shares were issued as fully paid in payment of building purchased, 8,000 shares were subscribed by the public and during the first year Rs. 5 per share were called-up, payable Rs. 2 on application, Rs. 1 on allotment, Rs. 1 on first call and Rs. 1 on second call. The amounts received in respect of these shares were:
On 6,000 shares Full amount called,
On 1,250 shares     Rs. 4 per share,
On 500 shares        Rs. 3 per share,
On 250 shares        Rs. 2 per share.
The Directors forfeited the 750 shares on which less than Rs. 4 had been paid. The shares were subsequently reissued at Rs. 3 per share.
Pass journal entries recording the above transactions and prepare the company's Balance Sheet.

Answer 59:

 

Question 60: Slow & Steady Ltd. invited applications for 10,000 Equity Shares of Rs. 10 each for public subscription. The amount of these shares was payable as: On application Rs. 1 per share, on allotment Rs. 2 per share, on first call Rs. 3 per share and on second and final call Rs. 4 per share. All sums payable on application, allotment and calls were duly received with the following exceptions:
(i) A, who held 200 shares, failed to pay the money on allotments and calls.
(ii) B, to whom 150 shares were allotted, failed to pay the money on first call and final call.
(iii) C, who held 50 shares, did not pay the amount of second and final call.
The shares of A, B and C were forfeited and were subsequently reissued for cash as fully paid-up at a discount of 5%. Pass necessary Journal entries to record these transactions in the books of X Ltd.

Answer 60:

 

Question 61: A share of Rs. 100 issued at a premium of Rs. 10 on which Rs. 80 (including premium) was called and Rs. 60 (including premium) was paid, has been forfeited. This share was afterwards reissued as fully paid-up for Rs. 70. Give Journal entries to record the above.

Answer 61:

 

Question 62: Pass journal entries in the following cases: M Ltd. forfeited 200 Equity Shares of Rs.10 each, issued at a premium of Rs. 5 per share, held by Ram for non-payment of the final call of Rs. 3 per share. Of these, 100 shares were reissued to Vishu at a discount of Rs. 4 per share.

Answer 62:

 

Question 63: VT Ltd forfeited 200 shares of Rs. 10 each, issued at a premium of Rs. 5 per share, held by Mohan for non-payment of the final call of Rs. 3 per share. 100 out of these shares were reissued to Narendra at a discount of Rs. 4 per share. Journalize.

Answer 63:

 

Question 64: The Directors of a company forfeited 300 shares of Rs. 10 each issued at a premium of Rs. 3 per share, for the non-payment of the first call money of Rs. 2 per share. The final call of Rs. 2 per share has not been made. Half the forfeited shares were reissued at Rs. 1,500 as fully paid-up. Record the journal entries for the forfeiture and reissue of shares.

Answer 64:

 

Question 65: JCV Ltd., forfeited 200 shares of Rs. 10 each issued at a premium of Rs. 2 per share for the non-payment of allotment money of Rs. 3 per share (including premium). The first and final call of Rs. 4 per share has not been made as yet. 50% of the forfeited shares were reissued at Rs. 8 per share as fully paid-up. Pass necessary Journal entries for the forfeiture and reissue of shares.

Answer 65:

 

Question 66: Pass necessary journal entries in the books of the company for the following transactions:
Vishesh Ltd. forfeited 1,000 Equity Shares of Rs. 10 each issued at a premium of Rs. 2 per share for non-payment of allotment money of Rs. 5 per share including premium. The final call of Rs. 2 per share was not yet called on these shares. Of the forfeited shares 800 shares were reissued at Rs. 12 per share as fully paid-up.
The remaining shares were reissued at Rs. 11 per share fully paid-up.

Answer 66:

 

Question 67: 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment were forfeited for non-payment of allotment money of Rs. 8 per share including premium. The first and final call of Rs. 4 per Pass Journal entries in the books of X Ltd. for the above.

Answer 67:

 

Question 68: Commence Publications Ltd. issued 50,000 Equity Shares of Rs. 10 each at a premium of 10% payable as under:
On application  Rs. 2,    On first call     Rs. 2,
On allotment    Rs. 5,    On final call     Rs. 2.
The calls were made by the company and all the money was duly received except the allotment and call money on 500 shares. These shares were, therefore, forfeited and later reissued @ Rs. 9 per share as fully paid-up.
Pass necessary journal entries to record the above transactions.

Answer 68:

 

Question 69: Gaurav applied for 5,000 shares of Rs. 10 each at a premium of 2.50 per share. But he was allotted only 2,500 shares on pro rata basis. After having paid Rs. 3 per share on application, he did not pay allotment money of Rs. 4.50 per share (including premium) and on his subsequent failure to pay the first call of Rs. 2 per share, his shares were forfeited. These shares were reissued at the rate of Rs. 8 per share credited as fully paid. Pass journal entries to record the forfeiture and reissue of shares. 

Answer 69:
 

 

Question 70: 'Telecom Ltd.' issued 20,000 Equity Shares of Rs. 10 each at a premium of Rs. 5 per share, payable as: Rs. 7 (including premium) on application, Rs. 5 on allotment and the balance after three months of allotment. A shareholder to whom 200 shares were allotted failed to pay the allotment and call money and his shares were forfeited. 160 of the forfeited shares were reissued for Rs. 1,600. Give necessary entries in company's Journal and the Balance Sheet. 

Answer 70:

 

 

Question 71: Kamal Ltd. was formed on 1st April, 2010 with an authorised capital of Rs. 2,00,000 , divided into 2,000 Equity Shares of Rs. 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of Rs. 5 per share payable as:
On application  Rs. 10 per share,
On allotment     Rs. 25 per share(including premium),
On first call       Rs. 40 per share,
On final call      Rs. 30 per share.
Applications were received for 900 shares which were duly allotted and the allotment money was received in full. At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ Rs. 60 per share, Rs. 70 per share paid-up. Final call has not been made. You are required to give necessary journal entries to record the above transactions and Show how share capital would appear in the Balance Sheet of the company.

Answer 71:

 

Question 72: Krishna & Co. Ltd. with an authorised capital of Rs. 2,00,000 divided into 20,000 Equity Shares of Rs. 10 each, issued the entire amount of the shares payable as:
Rs. 5 on application (including premium Rs. 2 per share),
Rs. 4 on allotment, and
Rs. 3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on which the allotment money has not been paid). The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at Rs. 7 per share payable by the purchaser as fully paid-up. Pass journal entries (including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.

Answer 72:

 

Question 73: Midee Ltd. invited application for issuing 27,000 shares of Rs. 100 each payable as follows:
Rs. 50 per share on Application;
Rs. 10 per share on allotment; and
Balance- on first and final call
Applications were received for 40,000 shares. Full allotment was made to the applicants of 7,000 shares. The remaining applicants were allotted 20,000 shares on pro rata basis. Excess money received on applications was adjusted towards allotment and call. Asha, holding 600 shares was belonged to the category of applicants to whom full allotment was made, paid the call money at the time of allotment. Ankur, who belonged to the category of applicants to whom shares were allotted on prorata basis, did not pay anything after application on his 200 shares. Ankur's shares were forfeited after the First and Final call. These shares were later reissued at Rs. 105 per share as fully paid-up. Pass necessary journal entries in the books of Midee Ltd. for the above transactions, by opening Calls-in-Arrears and Calls-in-Advance Accounts wherever necessary.

Answer 73:

 

Question 74: VXN Ltd. invited applications for issuing 50,000 equity shares of Rs. 10 each at a premium of Rs. 8 per share. The amount was payable as follows:
On Application      — Rs. 4 per share (Including Rs. 2 premium);
On Allotment         — Rs. 6 per share (Including Rs. 3 premium);
On First Call          — Rs. 5 per share (Including Rs. 1 premium); and
On Second and Final Call — Balance Amount
The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal's shares were immediately forfeited after allotment. Afterwards, the first call was made. Krishna, a holder of 100 shares, failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna's shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received. All the forfeited shares were reissued at Rs. 9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.

Answer 74:

 

Question 75: Sukanya Ltd. invited applications for issuing 1,00,000 equity shares of Rs. 10 each. The shares were issued at a premium of Rs. 20 per share. The amount was payable as follows:
On Application and Allotment    — Rs. 14 per share (including premium of Rs. 10),
On First Call                                 — Rs. 8 per share (including premium of Rs. 5),
On Final Call                                — Rs. 8 per share (including premium of Rs. 5).
Applications for 96,000 shares were received. Rohit , a shareholder holding 7,000 shares, failed to pay both the calls and Namit , a holder of 5,000 shares , did not pay the final call. Shares of Rohit and Namit were forfeited. Of the forfeited shares 8,000 shares including all the shares of Rohit were reissued to Reena at Rs. 8 per share fully paid-up. Pass necessary journal entries for the above transactions in the books of Sukanya Ltd.

Answer 75:

 

Question 76: Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs. 10 each. The amount was payable as follows:
On application and allotment - Rs. 4 per share ,
On first Call                              - Rs. 3 per share,
On second and final Call        - Balance.
Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due on first call. Vibha who was allotted 750 shares failed to pay the first call. Her shares were immediately forfeited. Afterwards the second call was made. The amount due on second call was also received except on 1,000 shares applied by Monika. Her shares were also forfeited. All the forefited shares were reissued to Mohit for Rs.9,000 as fully paid-up. Pass necessary journal entries in the Books of Alfa Ltd. for the above transactions.

Answer 76:

Question 77: Himalaya Company Limited issued for public subscription 1,20,000 equity shares of Rs. 10 each at a premium for Rs. 2 per share payable as under:
With Application                                  - Rs. 3 per share,
On allotment (including premium)     - Rs. 5 per share,
On First call                                          - Rs. 2 per share
On Second and Final call                    - Rs. 2 per share.
Applications were received for 1,60,000 shares . Allotment was made on pro rata basis. Excess money on application were adjusted against the amount due on allotment. Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs. 7 per share. Record journal entries and show the transactions relating to share capital in the company's Balance Sheet.

Answer 77:

 

Question 78: Amrit Ltd. issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as Rs. 3 on application, Rs. 4 on allotment (including premium) , Rs. 2 on first call and the remaining on second call. Applications were received for 75,000 shares and pro rata allotment was made to all the applicants. All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for Rs. 9,600. Final call was not made. Pass necessary Journal entries.

Answer 78:

 

Question 79: Dogra Ltd. had an authorised capital of Rs. 1,00,00,000 divided into Equity Shares of Rs. 100 each. The company offered 84,000 shares to the public at premium. The amount was payable as follow:
On Application                 —— Rs. 30 per share,
On Allotment                    —— Rs. 40 per share(including premium),
On First and Final call    —— Rs. 50 per share.
Applications were received for 80,000 shares. All sums were duly received except the following: Lakhan, a holder of 200 shares did not pay allotment and call money. Paras, a holder of 400 shares did not pay call money. The company forfeited the shares of Lakhan and Paras. Subsequently the forfeited shares were reissued for Rs. 80 per share as fully paid-up. Show the entries for the above transactions in the Cash Book and journal of the company.

Answer 79:

 

Question 80: Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share. The amount was payable as follows:
On application                 - Rs. 2 per share,
On allotment                   - Rs. 5 per share(including premium),
On first and final call     - Balance.
Applications for 1,50,000 shares were received . Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call. Shares of both Manu and Madhur were forfeited. The forfeited shares were reissued at Rs. 9 per share as fully paid-up. Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.

Answer 80:

 

Question 81: JJK Ltd. invited applications for issuing 50,000 equity shares of Rs. 10 each at par. The amount was payable as follows:
On Application                   - Rs. 2 per share,
On Allotment                      - Rs. 4 per share; and
On First and Final call       - Balance Amount.
The issue was oversubscribed three times. Applications for 30% shares were rejected and money refunded. Allotment was made to the remaining applicants as follows:
Category No. of Shares Applied No. of Shares Allotted
I         80,000       40,000
II       25,000       10,000
Excess money paid by the applicants who were allotted shares was adjusted towards sums due on allotment.
Deepak, a shareholder belonging to Category I, who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment. Afterwards, first and final call was made and was duly received. The forfeited shares of Deepak and Raju were reissued at Rs.11 per share fully paid-up. Pass necessary journal entries for the above transactions in the books of company.

Answer 81:

 

Question 82: XYZ Ltd . is registered with an authorised capital of Rs. 2,00,000 divided into 2,000 shares of Rs. 100 each of which, 1,000 shares were offered for public subscription at a premium of Rs. 5 per share , payable as:
On application    - Rs. 10 per share,
On allotment      - Rs. 25 per share (including premium),
On first call         - Rs. 40 per share
On final call        - Rs. 30 per share
Applications were received for 1,800 shares, of which applications for 300 shares were rejected outright; the rest of the applications were allotted 1,000 shares on pro rata basis. Excess application money was transferred to allotment. All the money was duly received except from Sundar, holder of 100 shares, who failed to pay allotment and first call money. His shares were later forfeited and reissued to Shyam at Rs. 60 per share Rs. 70 paid-up. Final call has not been made. Pass necessary Journal entries and prepare Cash Book in the books of XYZ Limited.

Answer 83:

 

Question 83: A Ltd. invited applications for issuing 1,00,000 shares of Rs. 10 each at a premium of Rs. 1 per share. The amount was payable as follows:
On Application       – 3 per share;
On Allotment          – 3 per share (including premium);
On First Call           – 3 per share;
On Second and Final Call – Balance amount.
Applications for 1,60,000 shares were received. Allotment was made on the following basis:
(i) To applicants for 90,000 shares      – 40,000 shares;
(ii) To applicants for 50,000 shares     – 40,000 shares;
(iii) To applicants for 20,000 shares    – Full shares.
Excess money paid on application is to be adjusted against the amount due on allotment and calls. Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money.
Another shareholder, Sudha, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money.
All the shares of Rishabh and Sudha were forfeited and were subsequently reissued at Rs. 7 per share fully paid.
Pass the necessary Journal entries in the books of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required.

Answer 83:

 

Question 84: Ruchi Ltd. issued for public subscription 40,000 Equity Shares of Rs. 10 each at a premium of Rs. 2 per share payable as:
On application                           - Rs. 2 per share;
On allotment                             - Rs. 5 per share (including premium),
On first call                               - Rs. 2 per share,
On second and final call         - Rs. 3 per share.
Applications were received for 60,000 shares. Allotment was made on pro rata basis to the applicants for 48,000 shares, the remaining applications being refused. Money overpaid on application was utilized towards sums due on allotment. Ram to whom 1,600 shares were allotted failed to pay the allotment money and Shyam to whom 2,000 shares were allotted failed to pay the two calls. These shares were subsequently forfeited after the second and final call was made. All the forfeited shares were reissued as fully paid-up @ Rs. 8 per share.
Give necessary Journal entries for the above transactions.

Answer 84:

 

Question 85: Competent Ltd. issued a prospectus inviting applications for 50,000 Equity Shares of Rs. 10 each, payable Rs. 5 as per application (including Rs. 2 as premium), Rs. 4 as per allotment and the balance towards first and final call.
Applications were received for 65,000 shares. Application money received on 5,000 shares was refunded with letter of regret and allotments were made on pro rata basis to the applicants of 60,000 shares. Money overpaid on applications including premium was adjusted on account of sums due on allotment.
Mr. Sharma to whom 700 shares were allotted failed to pay the allotment money and his shares were forfeited by the Directors on his subsequently failure to pay the call money.
All the forfeited shares were subsequently sold to Mr. Jain credited as fully paid-up for Rs. 9 per share.
You are required to set out the Journal entries and the relevant entries in the Cash Book.

Answer 85:

 

Question 86: Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share. The amount was payable as follows:
On application               - Rs. 6 per share(including premium Rs.1);
On allotment                 - Rs. 3 per share(including premium Rs. 1); and
The balance                  - on First and Final call.
Applications for 1,80,000 shares were received .Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants. Over payment received on application was adjusted towards sums due on allotment. All calls were made and were duly received except allotment and final call from Aditya who was allotted 3,200 shares. His shares were forfeited. Half of the forfeited shares were reissued for Rs. 43,000 as fully paid-up. Pass necessary journal entries for the above transactions in the books of Nitro Paints Ltd.

Answer 86:

 

Question 87: Raja Ltd. invited applications for issuing 50,000 Equity Shares of Rs. 10 each. The amount was payable as follows:
On Application                               - Rs. 3 Per share
On Allotment                                 - Rs. 5 Per share
On First and Final Call                 - Rs. 2 Per share
Applications for 70,000 shares were received. Allotment was made to all applicants on pro rata basis. Excess money received on application was adjusted towards sums due on allotment. Ramesh, who had applied for 700 shares, did not pay the allotment money and on his failure to pay the allotment money his shares were forfeited. Afterwards, the first and the final call were made. Adhar, who had been allotted 500 shares, did not pay the first and final call. His shares were also forfeited. Out of the forfeited shares 900 shares were reissued at Rs. 8 per share as fully paid-up. The reissued shares included all the shares of Ramesh.
Pass necessary journal entries for the above transactions in the books of the company.

Answer 87:

 

Question 88: Prince Limited issued a prospectus inviting applications for 20,000 equity shares of Rs.10 each at a premium of Rs. 3 per share payable as follows:
With application                                        - Rs.2,
On allotment (including premium)          - Rs.5,
On first call                                                - Rs.3,
On second call                                          - Rs.3.
Applications were received for 30,000 shares and allotment was made on pro rata basis. Money overpaid on application s was adjusted to the amount due on allotment. Mr Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited. Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for Rs. 9 per share, the whole of Mr. Mohit's shares being included.

Answer 88:

 

Question 89: XYZ Ltd. invited applications for issuing 50,000 Equity Shares of Rs.10 each. The amount was payable as:
On application                     Rs. 3 per share,
On allotment                       Rs. 4 per share,
On first and final call         Rs. 3 per share.
Applications were received for 75,000 shares and pro rata allotment was made as: Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. Applicants for 35,000 shares were allotted 30,000 shares on pro rata basis. Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment. Shamu, who had applied for 700 shares out of the group applying for 35,000 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. 8 per share as fully paid-up. The reissued shares included all the forfeited shares of Shamu. Pass necessary Journal entries to record the above transactions.

Answer 89:

 

Question 90: Super Star Ltd. issued a prospectus inviting applications for 2,000 shares of Rs. 10 each at a premium of Rs. 2 per share, payable as:
On application                               - Rs. 3 per share (including Rs. 1 premium),
On allotment                                 - Rs. 4 per share (including Rs. 1 premium),
On first call                                   - Rs. 3 per share
On second and final call             - Rs. 2 per share.
Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares. It was decided to utilize excess application money towards the amount due on allotment. Ramesh, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited. Rajesh, who applied for 72 shares failed to pay the two calls and on such failure, his shares were forfeited. Of the shares forfeited, 80 shares were sold to Krishan credited as fully paid-up for Rs. 9 per share, the whole of Ramesh's shares being included. Give journal entries to record the above transactions (including cash transactions).

Answer 90:

 

Question 91: Bharat Ltd. invited applications for issuing 2,00,000 Equity Shares of Rs. 10 each. The amount was payable as:
On application Rs. 3 per share, on allotment Rs. 5 per share and on first and final call Rs. 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis. Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis. Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Sharma, who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ Rs. 8 per share. The reissued shares included all the forfeited shares of Bajaj. Give necessary journal entries to record the above transactions.

Answer 91:

 

Question 92: The Directors of Super Star Ltd. invited applications for 2,00,000 Equity Shares of Rs. 10 each to be issued at 20% premium. The money payable per shares was: on application Rs. 5, on allotment Rs. 4 (including premium of Rs. 2), first call Rs. 2 and final call Rs. 1. Applications were received for 2,40,000 shares and allotment was made as:
(i) to applicants for 1,00,000 shares- in full,
(ii) to applicants for 80,000 shares- 60,000 shares,
(iii) to applicants for 60,000 shares- 40,000 shares.
Applicants of 1,000 shares falling in Category: (i) and applicants of 1,200 shares falling in Category (ii) Failed to pay allotment money. These shares were forfeited on failure to pay first call. Holders of 1,200 shares falling in Category. (iii) Failed to pay the first and final call and these shares were forfeited after final call.
1,300 shares [1,000 of Category (i) and 300 of Category (ii)] were reissued at Rs. 8 per share as fully paid-up. Journalize the above transactions. Prepare Cash book and Balance Sheet.

Answer 92:

 

Question 93: XYZ Ltd. issued a prospectus inviting applications for 2,000 shares of Rs. 10 each at a premium of Rs. 4 per share, payable as:
On application                        - Rs. 6 (including Rs. 1 premium)
On allotment                          - Rs. 2 (including Rs. 1 premium)
On first call                            - Rs. 3 (including Rs. 1 premium)
On second and final call      - Rs. 3 (including Rs. 1 premium)
Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares. It was decided to utilize excess application money towards the amount due on allotment.
X, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Y, who applied for 72 shares failed to pay the two calls and on his failure, his shares were forfeited. Of the shares forfeited, 80 shares were sold to Z credited as fully paid-up for Rs. 9 per share, the whole of Y's shares being included. Prepare Journal, Cash Book and the Balance Sheet.

Answer 93: