Short Answer Questions
Question 1. Show the Share Capital in Company’s balance sheet with imaginary figures.
Solution 1
Question 2. At least how much portion of the nominal amount of a share must be called as application money?
Solution 2 At least 5% of share application money of the nominal value of shares. The Application money must be deposited by the Company in a ‘Scheduled Bank’. Application money is a part of the share capital of the company, and as such, when the directors allot the shares the application money is transferred to share capital account. Application money received by the company when it shares are issues to the public.
Question 3. What is the maximum amount of a Call according to Table ‘F’ of Schedule I?
Solution 3 In the absence of the Articles of Association, the provisions of Table ‘F’ of Schedule I of the companies Act, 2013 shall apply. The amount to be called up either on application, or on allotment, or on any one call shall not exceed 25% of the total quantum of the issue.
Question 4. What is the minimum time interval between two consecutive calls according to Table ‘F’ of Schedule I?
Solution 4 In the absence of the Articles of Association, the provisions of Table ‘F’ of Schedule I of the companies Act, 2013 shall apply. There must be an interval of at least one month between the makings of two calls.
Question 5. What journal entry shall you pass when shares are issued by a Public Limited Co. on premium?
Solution 5 The amount of securities premium may be charged by the Company on application or on allotment or even with the calls.
Entries will be passed, if the amount of premium is received along with application money:
Question 6. Can securities premium be utilised for the purchase of fixed assets? Give reason.
Solution 6 No, securities premium cannot be utilised for the purchases of fixed assets. According to section 52 (2) of the companies Act, 2014 the amount of Securities premium can be utilised only for the following purpose:
1.) In writing off the preliminary expenses of the company.
2.) For writing off the expenses, commission or discount allowed on issue of share or debentures of the company.
3.) For providing for the premium payable on redemption of redeemable preference shares or debentures of the company.
4.) For issuing fully paid bonus shares.
5.) For Buy back of its own shares and other securities as per section 68.
Question 7. State any three purposes other than ‘issue of bonus shares’ for which securities premium can be utilized.
Solution 7 Securities Premium can utilized:-
1.) In writing off the preliminary expenses of the company.
2.) For writing off the expenses, commission or discount allowed on issue of share or debentures of the company.
3.) For providing for the premium payable on redemption of redeemable preference shares or debentures of the company.
Numerical Questions
Question 1. Vikas Ltd. has an authorised capital of Rs. 40,00,000 divided into 4,00,000 Equity shares of Rs. 10 each. Out of these, the company invited applications for 3,00,000 equity shares.
The public applied for 2,80,000 shares and all the money was duly received show how share capital will appear in the balance sheet of the company. Also prepare notes to accounts.
Solution 1
Question 2. 'Tractors India Ltd.' is registered with an authorized capital of Rs. 10,00,000 divided into equity shares of Rs. 10 each. The company issued 50,000 equity shares at a premium of Rs. 5 per share. Rs. 2 per share were payable with application, Rs. 8 per share including premium on allotment and the balance amount on first and final call. The issue was fully subscribed and all the amount due was received except the first and final call money on 500 shares allotted to Balram.
Present the ‘Share Capital’ in the Balance Sheet of ‘Tractors India Ltd.’ as per Schedule III Part I of the Companies Act, 2013. Also prepare Notes to Accounts for the same.
Solution 2 Extract of Balance Sheet of Tractors India Ltd.
Question 3. Nupur Ltd. was registered with an Authorised Capital of Rs. 20,00,000 divided into 2,00,000 equity shares of Rs. 10 each. The Company offered 1,50,000 equity shares for subscription to public and applications were received for 1,40,000 equity shares. The directors called Rs. 7 per share upto 31st March and the money called was duly received.
Show the Share Capital in the Balance Sheet of the Company together with notes to accounts.
Solution 3
Question 4. On 1st April, 2017, Shakti Ltd. was formed with an authorized capital of Rs. 60,00,000 divided into 3,00,000 equity shares of Rs. 20 each. Out of these, 50,000 shares were issued to the vendors as fully paid up for purchase of office premises. The directors offered 1,20,000 shares to the public and called up Rs. 10 per share and received the entire called up amount on these shares.
Show the share capital in the Balance Sheet of the company as per Schedule-III and also prepare 'notes to accounts'
Solution 4
Question 5. Rama Co. issued 50,000 share of Rs. 10 each payable as follows:
Rs. 3 on Application; Rs. 3 on Allotment
Rs. 2 on First Call; Rs. 2 on Final Call.
All the shares were subscribed and allotted. Give Journal entries and show the Share Capital in the Balance Sheet assuming that all sums have been duly received. Expenses on issue of share amounted to Rs. 10,000.
Solution 5
Question 6. Z Ltd. was registered with an authorised capital of Rs. 60,00,000 divided in 60,000 equity shares of 100 each. Company issued 25,000 equity shares at a premium of Rs. 20 per share, payable as follows: Rs. 30 on Application; Rs. 45 on Allotment (including premium); Rs. 20 on first call and Rs. 25 on Second and Final Call.
All shares were subscribed and all the money was duly received. Share issue expenses amounted to Rs. 40,OOO which were fully written off against Securities Premium.
Prepare necessary Journal Entries and Bank Account in the books of the Company.
Solution 6
Question 7. Pushkar Ltd. invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share. The whole amount was payable on application. The issue was fully subscribed.
Pass necessary journal entries.
Solution 7
Question 8. Kiran Textiles Ltd. issued 50,000 Equity share of Rs. 10 each at a premium of Rs. 4 per share and 2,000, 6% Preference Shares of Rs. 100 each at par payable as follows:
Equity Shares Pref. Share
On Application 3.50 30
On Allotment 6.50 20
On First Call 2 25
On Final Call 2 25
All these shares were fully subscribed, called up and paid. Record these transactions in journal and Cash book
Solution 8
Question 9. Kanpur Gas Ltd. issued 40,000 equity shares of Rs. 10 each at a premium of Rs. 1 per share. Amount were payable as follows:
Rs. 2.50 on Application; Rs. 4.50 on Allotments (including premium); Rs. 2 on First Call and RS. 2 on Final call.
Applications were received for 37,000 shares.
Give Journal Entries assuming that all sums have been received on due dates.
Solution 9
Question 10. Vimal Ltd. purchased machinery of Rs. 9,90,000 from Kamal Ltd. The payment to kamal ltd. was made by issuing equity shares of Rs. 100 each. Pass the necessary Journal entries in the books of Vimal Ltd. for purchase of machinery and the issue of shares when
(i) Shares were issued at par.
(ii) Share were issued at 25% premium.
Solution 10
Question 11. Pass Journal entries for the following:
(i) X Ltd. Purchased Land and Building from R. Sundram for Rs. 5,00,000 payable in fully paid shares of Rs. 100 each at a premium of 25%.
(ii) Y Ltd. decided to issue 2,000 shares of Rs. 100 each to the Unit Trust of India as underwriting commission.
Solution 11
Question 12. Taore Ltd. purchased a running business from Tulsi Bros. for a sum of Rs. 48,00,000 payable by the issue of fully paid equity shares of RS. 20 each at a premium of 20%. The assets and liabilities consisted of the following:
Plant and Machinery Rs. 25,00,000
Stock Rs. 15,00,000
Sundry Debtors Rs. 8,60,000
Sundry Creditors Rs. 3,00,000
Pass the necessary journal entries in the books of Tagore Ltd.
Solution 12
Question 13. X Ltd. took over the following assets and liabilities of Y Ltd.:
Land and Building Rs. 20,00,000; Stock Rs. 5,00,000; Sundry Debtors Rs. 2,50,000 and Sundry Creditors Rs. 2,00,000.
X ltd. paid purchase consideration by issuing Bank Draft of Rs. 16,00,000 and 50,000 Equity Shares of Rs. 20 each at 10% premium. Calculate purchase consideration and pass journal entries in the books of X ltd.
Solution 13
Question 14. Madhur Ltd. took over the assets of Rs. 3,90,000 and Liabilities of Rs. 40,000 of Rasova Ltd. for a consideration of Rs. 4,00,000. 20% was paid by a cheque and the balance by issue of gully paid equity shares of Rs. 100 each at a premium of 60%. Show necessary journal entries for these transactions in the books of Madhur Ltd.
Solution 14
Question 15. X Ltd. issued 20,000, 7% Preference shares of Rs. 100 each at a premium of 6%. Payments were to be made as – Rs. 25 on Application; Rs. 46 on Allotment, Rs. 10 on first Call and Rs. 25 on Final Call.
The applications for 18,000 shares were received and all were accepted. All the money was duly received except the first and final call on 100 shares.
Give the necessary Journal Entries and prepare Cash Book of the Company. Also show the share Capital in the Balance Sheet of the Company.
Solution 15
Question 16. Shipra Limited invited application for 80,000 shares of Rs. 10 each payable as follows:
Rs. 2.50 on Application (on 1st May, 2015);
Rs. 2.50 on Allotment (on 1st June, 2015);
Rs. 2.50 on First Call (on 1st Nov., 2015);
Rs. 3 on Second Call (on 1st Feb., 2016);
All the shares were applied and allotted. Shankar holding 600 shares paid the whole of the amount along with allotment.
Pass Cash Book and Journal entries assuming that books are closed on 31st March every year.
Solution 16
Question 17. On 1st February 2016, Raj Ltd. received in advance the first call of Rs. 25 per share on 400 equity shares. The first call was due on 31st March 2016.
Solution 17
Question 18. A limited Company was registered with a capital of Rs. 5,00,000 in shares of Rs. 10 each and issued 20,000 such shared at a premium of Rs. 2 per share, payable as Rs. 3 per share on application, Rs. 4 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 were duly received but when the first call was made, one shareholder paid the entre balance on his holding of 300 shares, and another shareholder holding 1,000 shares failed to pay the first call money.
Give Journal entries to record the above transactions and show how they will appear in the company’s Balance Sheet.
Solution 18
Question 19. On 28-2-2016 the first call of Rs. 2 per share become 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 Rs. 4 per share along with the first call. Pass necessary Journal entry for the amount received by opening call-in-arrear and calls-in-advance accounts in the books of the company.
Solution 19
Question 20. Jyoti Power Ltd. decided to issue 8,50,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share. The whole amount was payable on application. Application for 20,00,000 shares were received. Application for 3,00,000 shares were rejected and shares were allotted to the remaining applicant on pro-rata basis.
Pass necessary Journal entries for the above transactions in the books of the company.
Solution 20
Question 21. Govind Ltd. issued a prospectus inviting applications for 20,000 shares of Rs. 10 each at a premium of Rs. 3 per share, payable as to Rs. 4 on application; Rs. 5 on allotment (including premium); Rs. 2 on First call; and Final Call.
Applications were received for 27,000 shares. Directors allotted the shares as follows:
To applicants of 16,000 shares………………………………….. full allotment
To applicants of 6,000 shares………………………………….. 4,000 shares
To applicants of 5,000 shares………………………………….. Nil
Give entries in the cash book and journal, assuming that all sums due on allotment and calls have received.
Solution 21
Question 22. X ltd. issued share for Rs. 20,00,000 divided into shares of Rs. 10 each at a premium of Rs. 5 per share, payable as under:
On Application Rs. 4 Per share
On Allotment Rs. 6 (including premium of Rs. 3)
On First and Final Call Balance
Extra application money was to be adjusted against allotment and first and Final call and the money on rejected applications war to be returned.
The issue was oversubscribed to the extent of 80,000 shares and the allotment was made as follows:
(i) Applicants of 1,00,000 shares were allotted 30% shares, applicants for 10,000 shares were rejected and the remaining applicants were given full allotment.
All the money was duly received. Given journal entries.
Solution 22
Working Note:-
Calculation of Access Money:-
70,000 Share @ Rs. 4 per share = Rs. 2,80,000
Less: Adjustment in Allotment 30,000 @ Rs. 6 = Rs. 1,80,000
Amount transferred to Call in advance = Rs. 1,00,000
Question 23. A Company invited applications for 5,000 shares of Rs. 100 each. The amount is payable as follows:
On Application Rs. 20 Per share
On Allotment Rs. 30 Per share
On First and Final Call Rs. 20 Per share
On Second and Final Call Rs. 30 Per share
Applications were received for 8,000 shares. Applications for 1,000 shares were rejected and pro-rata allotment was made to the remaining applicants.
All Calls were made and duly paid except:
(i) Ganesh, the holder of 200 shares paid the two calls with allotment.
(ii) Shiva, the holder of 300 shares failed to pay the first and second call money.
Solution 23
Question 24. On October 1, 2018 X Ltd. offered 1,00,000 shares of Rs. 10 each payable as follows:
On Application Rs. 20 Per share
On Allotment Rs. 30 Per share
On First and Final Call Rs. 20 Per share
On Second and Final Call Rs. 30 Per share
Applications were received for 1,25,000 shares on October 15, 2018. Applications for 1,20,000 shares were allotted 1,00,000 shares and the remaining applications were rejected.
Give journal entries assuming that all amount have been received and the company maintains a combined account for application and allotment.
Solution 24
Question 25. X ltd. was registered with an authorised capital of 2,00,000 shares of Rs. 10 each. It purchased assets of Y ltd. for 3,00,000 and issued fully paid shares for purchase consideration. It also invited application for 1,20,000 shares payable as under:
Rs. 2.50 on application
Rs. 2.50 on allotment
Rs. 2 on first call and Rs. 3 on final call
Sarkar, who had been allotted 400 shares failed to pat the final call. His shares were forfeited and re-issued at Rs. 8.50 per share as fully paid up. Pass entries in the Cash Book and Journal. Show the share capital in the Balance Sheet of the Company.
Solution 25
Question 26. Alfa ltd. issued 5,000 shares of Rs. 100 each at par. The amount payable was as under:
Rs. 25 on application
Rs. 25 on allotment
Rs. 25 on first call
Rs. 25 on final call
The company did not make final call. X, a holder of 100 shares, failed to pay allotment and first call money. Directors forfeited his shares and immediately re-issued the forfeited share at Rs. 6.50.
Pass Journal entries in the books of the company and show the share capital in the Balance Sheet.
Solution 26
Question 27. Dinesh Ltd. issued 5,000 shares of Rs. 100 each at par, payable as follows:
On Application Rs. 25
On Allotment Rs. 25
On First Call Rs. 25
On Final Call Rs. 30
Anil, holding 100 shares failed to pay the amount of allotment and first call and his shares were forfeited after the first call.
Sunil, holding 200 shares failed to pay the amount due on final call and his shares were also forfeited. Show entries in the Cash Book and Journal of the Company.
Solution 27
Question 28. Fast Food Ltd. issued a prospectus offering 10,000 equity shares of Rs. 50 each at par payable as follows:
On Application Rs. 15
On Allotment Rs. 10
On First Call Rs. 15
On Final Call Rs. 10
Ram, the holder of 500 equity shares did not pay the amount due on both the calls. These 500 shares were forfeited by the Board of Directors and 300 of these shares were subsequently re-issued at Rs. 55 per share.
Show the entries in the Cash Book and Journal of the Company.
Solution 28
Question 29. Z ltd. was registered with an authorised capital of Rs. 10,00,000 divided into 10,000 shares of Rs. 100 each. The Company offered 5,000 of these shares to the public, which were payable Rs. 25 per share on application, Rs. 50 per share on allotment and the balance three months later. Applications for 7,100 shares were received on which the directors allotted as follows:
Application for 4,000 Shares Full
Application for 3,000 Shares 1,000
Applications for 100 Shares Nil
Rs. 1,85,000 was realised on account of allotment money (excluding the amount carried from application money) and Rs. 1,15,000 on account of call. The Directors decided to forfeit those shares on which allotment money was overdue.
Show the entries in the company’s books.
Solution 29
Question 30. W Ltd. issued 10,000 shares of Rs. 100 each. During the year only Rs. 80 were called payable as follows:
On Application Rs. 25
On Allotment Rs. 20
On First Call Rs. 20
On Final Call Rs. 15
Amount were received as follows:
On 8,000 shares the full amount called
On 1,200 share Rs. 65 per share
On 500 share Rs. 45 per share
On 300 share Rs. 25 per share
The directors forfeited those shares on which less than Rs. 65 per share were received. Show entries in the Cash Book and show the Share Capital in the Balance Sheet.
Solution 30
Question 31. ‘Suvidha Ltd.’ is registered with an authorized capital of Rs. 10,00,00,000 divided into 10,00,000 equity shares of Rs. 100 each. The company issued 1,00,000 shares for public subscription. A shareholder holding 100 shares, failed to pay the final call of Rs. 20 per share. His shares were forfeited. The forfeited shares were re-issued at Rs. 90 per share as fully paid up.
Present the ‘Share Capital’ in the Balance Sheet of the company as per Schedule III Part I of the Companies Act, 2013. Also prepare ‘Notes to Account’.
Solution 31
Question 32. Xansa Ltd. offered 22,000 equity shares of Rs. 100 each to the public at a premium of Rs. 20 per share. The amount per share was payable as Rs. 30 on application; Rs. 50 (including premium) on allotment; and the balance on first and final call. 20,000 shares were subscribed by the public. All calls were made. A shareholder holding 1,000 shares failed to pay the first and final call money. His share were forfeited Show ‘Share Capital’ in the Balance Sheet of Xansa Ltd. Also prepare ‘Note to Accounts’.
Solution 32
Question 33. David Ltd. issued Rs. 40,00,000 equity shares of Rs. 10 each out of its registered capital of Rs. 10,00,00,000. The amount payable on these shares was as follows:
On application Rs. 1 per share
On allotment Rs. 2 per share
On First Call Rs. 3 per share
On second and final call Rs. 4 per share
All calls were made and were duly received, except the second and final call on 1,000 shares held by Vipul. These shares were forfeited.
Present the ‘Share Capital’ in the Balance Sheet of the company as per Schedule III Part I of the Companies Act, 2013. Also prepare ‘Note of Accounts’.
Solution 33
Question 34. On 1st Apirl, 2014, Blue Haven Ltd. was formed with an authorised capital of Rs. 20,00,000 divided into 2,00,000 equity shares of Rs. 10 each. The company issued prospectus inviting applications for 1,50,000 equity shares. The company received applications for 1,40,000 equity shares. During the first year, Rs. 7 per share were called. Arun holding 4,000 shares and Varun holding 3,000 shares did not pay the first call of Rs. 2 per share. Varun’s shares were forfeited after the first call and later on 1,800 of the forfeited shares were re-issued at Rs. 5 per share, Rs. 7 called up.
Show the following:
(a) Share Capital in the Balance Sheet of the company as per Schedule III Part I of the Companies Act, 2013.
(b) Also prepare ‘Note to Accounts’ for the same.
Solution 34
Question 35. Surya Tube Limited issued 20,000 shares of Rs. 100 each. The due amount was received except for 500 shares on which Rs. 75 per share was received. These 500 shares were forfeited and 300 shares were reissued for Rs. 60 each fully paid-up.
Show the forfeited Shares Account and the Balance Sheet as at closing date.
Solution 35
Question 36. A, who holds 200 shares of Rs. 100 each, has paid only Rs. 25 per share as application money.
B, who holds 300 shares of Rs. 100 each, has paid Rs. 25 per share on application and Rs. 30 per share on allotment.
C, who holds 400 shares of Rs. 100 each, has paid Rs. 25 per share on application, Rs. 30 per share on allotment and Rs. 20 per share on first call.
They failed to pay their arrears and the final call. Their shares were forfeited and re-issued at Rs. 95 per share. Prepare necessary journal entries.
Solution 36
Question 37. Pass journal entries for the forfeiture and re-issue in the following cases:
(i) A ltd. forfeited 100 share of Rs. 10 each fully called-up for non-payment of first call of Rs. 3 per share and final call of Rs. 3 per share. All of these shares were re-issued as fully paid for Rs. 10 per share.
(ii) B ltd. forfeited 400 shares of Rs. 10 each fully called-up for non-payment of final call of Rs. 3 per share. 300 of these shares were re-issued as fully paid for Rs. 8 per share.
(iii) C ltd. forfeited 700 shares of Rs. 10 each fully called-up on which the holder has paid application money @ Rs. 3 and allotment money @ Rs. 2 per share. Out of these, 300 shares were re-issued as fully paid Rs. 7 per share.
(iv) D ltd. forfeited 1,000 shares of Rs. 10 each fully called-up on which the holder has paid only the application money @ Rs. 3 per share. Out of these, 600 shares were re-issued at Rs. 10.50 per share, fully paid up.
Solution 37
Question 38. Pass journal entries for the forfeiture and re-issue in the following cases:
(a) X ltd. forfeited 700 shares of Ashok of Rs. 10 each Rs. 8 called –up, on which he had paid Rs. 5 per share. Out of these, 500 shares were re-issued for Rs. 9 per share as fully paid.
(b) Y ltd. forfeited 400 shares of Rs. 10 each, Rs. 6 called –up, for non-payment of first call of Rs. 2 per share. Out of these, 300 shares were immediately re-issued at Rs. 5 per share.
(c) Z ltd. forfeited 300 share of Rs. 100 each on which first call of Rs. 20 per share was no received, the second and final call of Rs. 30 per share has not yet been called. Out of these, 200 shares were re-issued as Rs. 70 paid-up for Rs. 55 per share.
Solution 38
Question 39. Journalise the follow ing:
(i) A Ltd. forfeited 1,000 shares of Rs. 10 each, Rs. 8 paid, for non-payment of final call of Rs. 2 per share. Out of these, 400 shares were re-issued as fully paid-up in such a way that Rs. 2,000 should be transferred to Capital reserve.
(ii) B Ltd. forfeited 1,000 shares of RS. 10 each, Rs. 8 called-up, for non-payment of Allotment of Rs. 2.50 per share and first call of Rs. 3 per share. Out of these, 400 shares were re-issued for Rs. 7 per share as Rs. 8 paid-up.
(iii) C Ltd. forfeited 300 shares of Rs. 10 each on which Rs. 7 has been called and Rs. 5 has been paid. Out of these, 100 shares are re-issued for Rs. 6 per share as Rs. 7 paid-up.
Solution 39
Question 40. Paliwal Exports Ltd. with a share capital of Rs. 10,00,000 divided into 20,000 shares of Rs. 50 each offers the shares to the public as under:
Rs. 15 per share payable on application; Rs. 15 per share payable on allotment; Rs. 10 per share payable on First call; and Rs. 10 per share payable on second call.
Shareholder ‘A’ who holds 200 shares has paid only the application money.
Shareholder ‘B’ who holds 300 shares has paid only the application and allotment money.
Shareholder ‘C’ who holds 400 shares has paid application, allotment and first call money.
The company forfeits the shares of the above shareholders who have not paid the arrears and re-issued 600 of these shares at a discount of 20%.
Journalise the above transactions including entries relating to bank in the books of Paliwal Exports Ltd.
Solution 40
Question 41. Accountancy Publication Ltd. issued 50,000 equity shares of Rs. 10 each at a premium of 10% payable as under:
On Application Rs. 3; On Allotment Rs. 4 (Premium Re.1); On First Call Rs. 2; and On Final Call Rs. 2.
The whole of the issue was called for by the company and all the money were duly received except the allotment and calls money on 500 shares. These shares were, therefore, forfeited and later on re-issued at Rs. 9 per share as fully paid. Pass the necessary journal entries to record the above transactions.
Solution 41
Question 42. X ltd. issued a prospectus offering 2,00,000 shares of Rs. 10 each at Rs. 14 per share, payable as follows:
On Application Rs. 4
On Allotment Rs. 6 (including premium Rs. 4)
On First Call Rs. 3
On Final Call Balance
Dinesh, the holder of 1,000 shares, did not pay the amount due on allotment and first call. His shares were forfeited and 400 of these shares were immediately re-issued credited Rs. 9 paid for Rs. 8.40 per share.
Final call was made afterwards and it was duly received.
Show entries in the Cash Book and the Journal of the company.
Solution 42
Question 43. Vikram Ltd. issued 50,000 shares of Rs. 10 each at a premium of Rs. 1 per share payable as follows:
Rs. 3 on Application
Rs. 4 on Allotment (including premium)
Rs. 2 on First Call
Balance when required
Applications were received for 46,000 shares and all of these were accepted. Directors did not make final call. A shareholder holding 800 shares did not pay the amount due on first call. The shares were forfeited and re-issued at Rs. 7 per share, Rs. 8 per share paid. Pass Cash Book and Journal Entries.
Solution 43
Question 44. Give journal entries for forfeiture and re-issue of shares:
(a) X ltd. forfeited 500 shares of Rs. 100 each, Rs. 75 called-up, issued at 10% premium (to be paid at the time of allotment) for non-payment of a first call of Rs. 20 per share. Out of these, 200 shares were re-issued as Rs. 75 paid-up for Rs. 60 per share.
(b) X ltd. forfeited 300 shares of Rs. 100 each, Rs. 75 called-up, issued at 10% premium (to be paid at the of allotment) for non-payment of allotment money of Rs. 30 per share (including premium) and first call of Rs. 20 per share. Out of these, 100 shares were re-issued as fully paid-up in such a way that Rs. 3,100 were transferred to capital reserve.
Solution 44
Question 45. Journalise the following:
(a) Y ltd. forfeited 400 shares of Rs. 100 each, issued at a premium of Rs. 5 per share (to be paid at the time of allotment) for non-payment of a first call of Rs. 20 per share. The second and final call of Rs. 20 per share. The second and final call of Rs. 20 has not yet been called. Out of these, 100 shares were re-issued on fully paid-up Rs. 110 per share.
(b) Y ltd. forfeited 700 shares of Rs. 100 each, issued at a premium of Rs. 5 per share for non-payment of allotment money of Rs. 35 per share (including premium) and first call of Rs. 20 per share. The second and final call of Rs. 20 has not yet been called. 500 of these shares were re-issued as Rs. 80 paid-up for Rs. 92 per share.
Solution 45
Question 46. Luxury Cars Ltd. invited applications for issuing 10,000 equity shares of Rs. 50 each at a premium of Rs. 100 per share. The amount was payable as follows:
On application – Rs. 75 per share (including Rs. 50 premium)
On allotment – the balance
The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares were forfeited. The forfeited shares were later on re-issued for Rs. 90 per share as fully paid up.
Pass necessary journal entries for the above transactions in the books of the company.
Solution 46
Question 47. Hindustan Ltd. issued 20,000 shares of Rs. 20 each at 20% premium. Amount was payable as follows:
On application Rs. 5
On allotment Rs. 6
On first call Rs. 7
On Second and final call Rs. 6
Applications were received for 18,000 shares and all were accepted. All money was received except:
(i) Vasundhra, holding 500 shares failed to pay allotment money and her shares were forfeited after allotment.
(ii) Tapasya, holding 300 shares failed to pay first call money and her shares were forfeited after first call.
(iii) Swarna, holding 400 shares failed to pay first and second call money and her shares were forfeited.
All the forfeited shares were reissued at a discount of 10% as fully paid up.
Pass the necessary journal entries in the books of Hindustan Ltd.
Solution 47
Question 48. A Co. Ltd. offered to the public 20,000 equity shares of Rs. 100 each at a premium of Rs. 10 per share. The payment was to be as follows:
On Application Rs. 30 per share
On Allotment Rs. 30 per share (including premium)
On First Call Rs. 25 per share
On Second and Final Call Rs. 25 per share
Application were received for 35,000 shares, Applications for 10,000 shares were rejected. Applicants for 15,000 shares were allotted 10,000 shares and remaining applications were accepted in full. The directors made both the calls. One shareholder holding 500 shares failed to pay the two calls and as a consequence his shares were forfeited. 200 of these shares were re-issued as fully paid at Rs. 80 per share.
Expenses of issued came to Rs. 10,000.
Prepare cash book, the journal and the balance sheet on the basis of of information give above.
Solution 48
Question 49. On March 1, 2016 the Directors of Sahara Ltd. issued 10,000 Equity Shares of Rs. 100 each at Rs. 125 per share, payable Rs. 50 on application (including premium), Rs. 45 on allotment and the balance on 1st June, 2016.
The lists closed on March 10, 2016 y which date applications for 16,000 shares were received. Of the cash received, Rs. 50,000 was returned and Rs. 2,50,000 was applied to the amount due on allotment, the balance of which was paid on March 16, 2016.
Call money was received on 1st June, 2016 with the exception of one allotted of 200 shares. The shares were forfeited on October 15, 2016 and reissued as fully paid at Rs. 110 per share on December 3, 2016.
Record necessary journal entries in the books Sahara Ltd. using a joint account of application and allotment.
Solution 49
Question 50. Elite Ltd. invited applications from public for 5,00,000 equity shares of Rs. 10 each issued at Rs. 11 per share. The payment was to be made as follows: Rs. 3 on Application; Rs. 4 on Allotment including premium and Rs. 4 on call.
Application for 6,50,000 shares were received. Allotment of shares was made as follows: (i) 100% shares to applicants of 4,00,000 shares; (ii) 50% shares to applicants of 2,00,000 shares, (iii) No Allotment to applicants of 50,000 shares.
A shareholder to whom 500 shares were allotted under category (i) paid full amount due on shares along with allotment money. Another shareholder holding 1,000 shares failed to pay the amount due on call. His shares were forfeited and 800 of these shares were subsequently re-issued as fully paid-up @ Rs. 8 per share.
Pass the journal entries and give balance sheet of the company.
Solution 50
Extra money received from application:-
A applicant demand 2,00,000 shares allotted 1,00,000 shares = 1,00,000 × 3 = Rs. 3,00,000
Question 51. AXN Ltd. invited applications for issuing 1,00,000 equity shares of Rs. 10 each at a premium of Rs. 6 per share. The amount was payable as follows:
On Application Rs. 4 per share (including Rs. 2 Premium)
On Allotment Rs. 5 per share (including Rs. 2 Premium)
On First Call Rs. 4 per share (including Rs. 2 Premium)
On Second and Final Call Balance Amount
The issue was fully subscribed.
Kumar, the holder of 400 shares did not pay the allotment money and Ravi the holder of 1,000 shares paid his entire share money along with allotment money. Kumar’s shares were forfeited immediately after allotment. Afterwards first call was made. Gupta, a holder of 300 shares failed to pay the first call money and Gopal a holder of 600 shares paid the second call money also along with first call. Gupta’s shares were forfeited immediately after the first call. Second and final call was made after wards. The whole amount due on second call was received.
All the forfeited shares were re-issued at Rs. 9 per share fully paid-up.
Pass necessary Journal Entries for the above transactions in the books of the company.
Solution 51
Question 52. Journalise the following transactions in the books of Poonam Ltd.:
200 shares of Rs. 10 each issued at a premium of Rs. 5 each payable with allotment were forfeited for the non-payment of allotment money of Rs. 8 per share including premium. The first and final call on these shares at Rs. 3 per share was not made. The forfeited shares were re-issued @ Rs. 12 per share fully paid up.
Solution 52
Question 53. Prayuj Ltd. forfeited 2,000 shares of Rs. 10 each, fully called up, on which they had received only Rs. 14,000. Out of these, 50 of the forfeited shares were reissued for Rs. 9 per share fully paid up.
Pass necessary journal entries for forfeiture and re-issue of shares. Also prepare share forfeited account.
Solution 53
Question 54. Vaibhav Ltd. issued 20,000 equity shares of Rs. 100 each at Rs. 250 payable as follows:
On Application Rs. 100 (including premium Rs. 60)
On Allotment Rs. 50 (including premium Rs. 30)
On First Call Rs. 70 (including premium Rs. 40)
On Second and Final Call Rs. 30 (including premium Rs. 20)
All amounts were received except first and second and final call on 750 shares held by Mr. Akash. His shares were forfeited and 2/3rd of these shares were reissued to Mr. Dinesh at Rs. 200 per share. Pass entries for forfeiture and reissue.
Solution 54
Question 55. X ltd. offered 25,000 shares of Rs. 100 each payable as Rs. 25 on application, Rs. 20 on allotment, Rs. 30 on first call and the balance on final call.
Applications were received for 40,000 shares out of which shares were allotted to the applicants for 35,000 shares on a pro-rata basis. All shareholders paid the allotment money excepting Mr. Gopal who was allotted 500 shares. These shares were forfeited immediately. The first call was made thereafter. The forfeited shares were re-issued @ Rs. 78 Prepare Cash Book and pass journal entries.
Solution 55
(B)
Allotment amount due = 500 shares × Rs. 20 = Rs. 10,000
Less: Extra amount received = Rs. 5,000
Amount not due on allotment = Rs. 5,000
Question 56. A limited company invites applications for 50,000 equity shares of Rs. 10 each payable as follows:
On Application Rs. 3
On Allotment Rs. 4
On First Call Rs. 2
On Second and Final Call Balance
Applications were received for 70,000 shares. Allotments were made on the following basis:
(i) To applicants for 10,000 shares – in full
(ii) To applicants for 60,000 shares – 40,000 shares
Extra money paid on application was utilised towards allotment money.
A shareholder who was allotted 1,000 shares out of the group applying for 60,000 shares failed to pay allotment money and money due on calls. These shares were forfeited. 600 forfeited shares were re-issued as fully paid on receipt of Rs. 8 per share.
Prepare cash book and journal entries in the books of company.
Solution 56
Question 57. Jay Ltd. issued a prospectus inviting applications for 1,00,000 shares of Rs. 10 each. These shares were issued at par on the following terms:
On application Rs. 2.50, on allotment Rs. 2.50 on final call Rs. 3 and on final call the balance.
Applications were received for 1,35,000 shares. Allotments were made on the following basis:
(i) To applicants for 25,000 shares – in full;
(ii) To applicants for 60,000 shares – 45,000 shares
(iii) To applicants for 50,000 shares – 30,000 shares
All Extra amount paid on application is ot be adjusted against amount due on allotment.
The shares were fully called and paid-up except the amount of allotment, first and final call not paid by those who applied for 4,000 shares of the group applying for 50,000 shares.
All the shares on which calls were not paid were forfeited by the Board of Directors. 1,800 forfeited shares were re-issued as fully paid on receipt of Rs. 9 per share.
Prepare Cash Book and Journal entries to record the above.
Solution 57
(B)
Allotment Amount due on 2,400 shares = 2,400 × Rs. 2.50 = Rs. 6,000
Less: Extra received on application from shares = Rs. 4,000
Amount not received on allotment = Rs. 2,000
(C)
Allotment Amount due on 1,00,000 shares = 1,00,000 × Rs. 2.50 = Rs. 2,50,000
Less: Extra received on application from shares = 35,000 × Rs. 2.50 = Rs. 87,500
Amount due on allotment = Rs. 1,62,500
Less: Amount not received on allotment = Rs. 2,000
Net Amount received = Rs. 1,60,500
Question 58. XY Ltd. invited applications for 5,00,000 Equity shares of Rs. 10 each, payable as Rs. 3 on application, Rs. 4 on allotment and the balance on first and final call. Applications were received for 12,00,000 shares and the shares were allotted on a pro rata basis. The Extra application money was to be adjusted against allotment only. R, a shareholder, who had applied for 6,000 shares, failed to pay the call money and his shares were accordingly forfeited and reissued at Rs. 9 per share as fully paid. Pass necessary journal entries.
Solution 58
Question 59. A company issued 10,000 shares of Rs. 10 each at a premium of Rs. 1 per share, payment to be made as follows:
On Application Rs. 3
On Allotment Rs. 4 (including premium)
On First call Rs. 2
On Second and Final call Rs. 2
Applications were received for 20,000 shares. Applications for 5,000 shares were rejected and allotment was made proportionately to the remaining applicants. The directors made both the calls and all the money were received, except the allotment, first call and 400 shares, which were subsequently forfeited. Later, 300 of the forfeited shares were re-issued as fully paid @ Rs. 15 per share. Give journal entries to record the above. Also prepare the Balance Sheet.
Solution 59