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Issue of Share

The document outlines various scenarios related to the issuance of shares, including shares issued at par and at a premium, along with the corresponding journal entries and balance sheet representations. It covers cases of share forfeiture and re-issue, detailing the financial implications and calculations involved. Additionally, it provides answers to specific accounting questions regarding share capital and related transactions.

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0% found this document useful (0 votes)
40 views23 pages

Issue of Share

The document outlines various scenarios related to the issuance of shares, including shares issued at par and at a premium, along with the corresponding journal entries and balance sheet representations. It covers cases of share forfeiture and re-issue, detailing the financial implications and calculations involved. Additionally, it provides answers to specific accounting questions regarding share capital and related transactions.

Uploaded by

singhakriti.ak
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Issue of Shares at Par

oskama73 on Application,
Rama Co. issued 50,000 shares of 10 each payable as follows :
73 on Allotment
T2 on
72 First Call:Ua 2on Final Call.dn
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.
Expenseson issue of shares amounted to 10,000.
[Ans. Share Capital 5,00,000; Cash at Bank 74,90,0001
hesw Issue of Shares at Premiumboen
o 6.)Z Ltd. was registered with an authorised capital of 60,00,000 divided in
60,000 equity shares of 100 each. Company issued 25,000 equity shares at a premium
of 20 per share, payable as follows : 30 on Application; 45 on Allotment
(including premium);: K20 on first call and 25 on Second and Final Call.
All shares were subscribed and all the money was duly received. Share issue
expenses amounted to 40,000 which were fully written off against Securities
Premium.
Prepare necessary Journal Entries and Bank Account in the books of the
Company.
JAns. Share Capital 25,00,000; Reserve and Surplus 4,60,000; Balance at Bank
Z29,60,000.]ol 2al0Moe
Q.9. Kanpur Gas Ltd. issued 40,000 equity shares of 10 each at a premium of 71
per share. Amounts were payable as follows :
72.,50on Application; T4.50 on Allotment (including premium); 2 on First Call
and 2 on Final Call.
Applications were received for 37,000 shares.
Give Journal Entries assuming that all sums have been received on due dates.
[Ans. Share Capital 3, 70,000; Cash at Bank 4,07,000.]
Shares issued for consideration other than cash
Q. o. Nimal Ltd. purchased machinery of T9,90,000 from Kamal Ltd. The
payment to Kamal Ltd. was made by issuing equity shares of 100 each. Pass the
necessary Journalentries in the books of Vimal Ltd. for purchase of machinery and the
issue ofshares when
(i) Shares were issued at par.
(i) Shares were issued at 25% premium.
JAns. Face value of shares issued in case (i) 9,90,000; Case (ií) 27,92,000]
Q.A,Pass journalentries for the following :
(i)XLtd. purchased Land and Building from R. Sundram for 75,00,000 payable
in fully paid shares of 100each at a premium of 25%.
(i0) YLtd. decided to issue 2,000 shares of I00 each to the Unit Trust of India as
underwriting commission. (eupenge
[Ans. (i) 4,000 shares of T100each issued at 725per share premium.
JTagore Ltd. purchased a running business from Tulsi Bros. for a sum of
<48,00,000 payable by the issue of fully paid equity shares of 20 each at apremium
of 20%.The assets and liabilities consisted of the following: h
Plant and Machinery 25,00,000
Stock bababtioh olob 15,00,000
Sundry DebtorslEsh e e i t e l 3,00,000
Sundry Creditors 3,00,000
Pass the necessary journal entries in the books of Tagore Ltd.
JAns. Goodwill 2,40,000; Number of shares issued 2,00,000. Premium on Issue
of shares R8,00,000.]
0.13X Ltd. took over the following assets and liabilities of YLtd. :
Land &Building 20,00,000; Stock 5,00,000; Sundry Debtors 2,50,000 and
Sundry Creditors 2,00,000.
X Ltd. paid purchase consideration by issuing Bank Draft of 16,00,000 and
50,000Equity Shares of 20 each at 10% premium. Calculate purchase consideration
and pass journal entries in the books ofX Ltd.
JAns. Purchase consideration 27,00,000; Goodwill 1,50,000.1
Q.(18.A limited Company was registered with a capital of ?5,00,000 in shares of
R10 each and issued 20,000 such shares at a premium of T2 per share, payable as 3
per share on application, 4 per share on allotment (including premiu1n) and ?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 entire balance on his holdings of 300shares, 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 share capital
will be shown in the company's Balance Sheet.
JAns. Cash at Bank 1,78,900; Amount received on frst call 38,900 (R40,000
72,000+ 7900).]
Hint :Second Call has not been made in the question,as such, the entries are to be passed
upto first call only.b otiuTebienoa
Q.(19.)On 28-2-2016 the first call of 2 per share became due on 50,000 equity
shares aiótted by Kumar Ltd. Komal, a holderof 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
alongwith 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.
An elis) (C.B.S.E. 2016, Outside Delhi)
JAns. Amount received 1,01,000.1]
Forfeiture of Shares Issued at Par
Q5)XLtd. was registered with an authorised capital of 2,00,000 shares of 10
each. It purchased assets of YLtd. for 73,00,000 and issued fully paid shares for
purchase consideration. It also invited applications for 1,20,000 shares payable as
under:
72.50on application
72.50 on allotment
72 on first call and 3 on final call.
Sarkar, who had been allotted 400 shares failed to pay the final call. His shares
were forfeited and re-issued at 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.
[Ans. Cash at Bank 12,02,200; Capital Reserve 2,200.]
1.Dinesh Ltd. issued 5,000 shares of 100each at par, payable as follows:
On Application 25
On Allotment s
25
On First Call 20
On Final Call 30
Anil, holding 100 shares failed topay 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.
[Ans. Cash at Bank 74,86,500.]
Fast Food Ltd. issued a prospectus offering 10,000 equity shares of 750
each at par payable as follows :

On Application 15
On Allotment 10
On First Call 15
On Final Call 10
Ram, the holder of 500equity 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 55 per share.
Show the entries in the Cash Book and Journal of the
Company.osanh
[Ans. Cash at bank75,04,000; Capital Reserve 7,500.]
Q.30.) Ltd. issued 10,000 shares of 100 each. During the year only 80 were
called payable as follows :
On Application 725
On Allotment 720
On Ist Call 720
On IInd Call 715
Amounts were received as follows:
On 8.000 shares the full amount called
On 1,200shares 65 per share
On 500 shares Z45per share
On 300 shares 725 pershare
The directors forfeited those shares on which less than 65 per share were
received. Show entries in the Cash Book and Journal and show the Share Capital in the
Balance Sheet.
[Ans. Cash at Bank 7,48,000; Amount received on Allotment 1,94.000- o
First Call 1,34,000 and on Second Call 1,20,000; Balance of Share Forfeiture
Account 30,000; Calls in arears 18,000.]
Q2.)Xansa Ltd. offered 22,000 equity shares of 100 each to the public at a
premiám of 20 per share. The amount per share was payable as 30 on application;
*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 forfeted. Show
'Share Capital in the Balance Sheet of Xansa Ltd. Also, prepare Notes to Accounts'.
(C.B.S.E. 2017, Delhi)
[Ans. Subscribed and Fully Paid Share Capital 19,60,000.]
33.)David Ltd. issued 40,00,000 equity shares of 10 each out of its registered
capital of10,00,00,000. The amount payable on these shares was as follows
On application ?lper share
On allotment 2per share
On first call ×per share 20
On second and final call 74 per share
Allcalls 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
II Part I of the Companies Act, 2013. Also prepare Notes to Accounts'.
(CBSE 2015, All India Set III)
[Ans. Subscribed and Fully Paid Capital 39,96,000]
O34) On 1st April, 2014, Blue Heaven Ltd. was formed with an authorised
capital of 20,00,000 divided into 2,00,000 equity shares of 10each. 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, 7 per share
were called. Arun holding 4,000 shares and Varun holding 3,000 shares did not pay the
first callof 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 5 per share, 7 called up.
Show the following :
(a) Share Capital in the Balance Sheet of the company as per Schedule II
Part I of theCompanies Act, 2013.
(b) Also prepare Notes to
Accounts' for the same.
Ans. Subscribed but not fully paid capital
9,69,600.]
o38)Pass journal entries for the forfeiture and re-issue in the following cases
(a) XLtd. forfeited 700 shares of Ashok of 10 each 8 called-up, on which he
had paid 75per share. Out of these, 500shares were re-issued for79 per share
as fully paid.
(b) YLtd. forfeited 400 shares of 7 10each, 6called-up, for
call of 2 per share. Out of these, 300
non-payment of first
ub oe shares were immediately re-issued at
Z5 per share.
(c) Z Ltd. forfeited 300 shares of ?100 each on which first call of 20 per share
was not received, the second and final call of 30 per share has not yet been
called. Out of these, 200 shares were re-issued as 70paid-up for 355 per
share.
[Ans. Capital Reserve (a) 2,000; (b) Z900; (c) 7,000.]
Q.69. Journalise the following:
()ALtd. forfeited 1,000 shares of T10 each, 78 paid, for non-payment of final
call of 2 per share. Out of these, 400 shares were re-issued as fully paid-up
in such a way that 2,000 were transferred to capital reserve.
(ii) B Ltd. forfeited 1,000 shares of ?10 each, 78 called-up, for non-payment of
oAlotment of T2.50 per share and first call of 3per share. Out of these, 400
shares were re-issued for 7per share as 8 paid-up.ols o ete T E
(iii) CLtd. forfeited 300 shares of 10each on which 7 has been called and 5
has been paid. Out of these, 100 shares are re-issued for 26 per share as 7
paid-up.
[Ans. () Re-issue price 7 per share; Capital Reserve (i) T600; (iii) Z400.]
COM
therefore, forfeited and later on re-issued at 29 per share as fully paid. Pass the
necessary journal entries to record the above transactions.
JAns Capital Reserve RI,000.]
oXLid. follows
issued a:prospectus offering 2,00,000 shares of t10 each at Z14 per
share,payable as
On Application 74
On Allotment T6 (including premium 4)
On First Call 73
On Final Call Balance
Dinesh, the holder of 1,000shares, did not pay the amount due on allotment and
Cestcall. His shares were forfeited and 400 of these shares were immediately re-issued
credited 9 paid for 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.
2,400; Capital
JAns. Cash at Bank 27,93,760; Balance of Share Forfeiture A/c
7,96,000.]
Reserve 1,360; Balance of SecuritiesPremium Reserve A/c
o!43.]Vikram Ltd. issued 50,000 shares of R10 each at a premium of ?lper share
payable as follows :
73on Application
74 on Allotment (including premium)
72 on Ist Call
Balance when required
these were accepted.
Applications were received for 46,000 shares and all of shares did not pay the
holding 800
Directors did not make the final call.A shareholder
on first call. The shares were forfeited and re-issued at 7 per share,78
amount due
per share paid.
Pass Cash Book and Journal Entries.
74,000.]
[Ans. Cash at Bank R4, 18,000; Capital Reserve
shares :
Q(44)Give journalentries for forfeiture and re-issue ofcalled-up, issued at 10%
(a) XLtd. forfeited 500 shares of 100. each, 75
for non-payment of a first call
premium (to be paid at the time of allotment) re-issued as 75 paid-up for
were
of 20per share. Out of these, 200 shares
60 per share.
Ltd. forfeited 300 shares of 100 each, 75 called-up, issued at 10%
(b) X for non-payment of allotment
premium (to be paid at the time of allotment)
of Z30 per share (including premium) and first call of 20 per share.
money fully paid-up in such a way that
Out of these, 100 shares were re-issued as
3,100 were transferred to capital reserve.
Re-issue Price 96 per share.
[Ans. (a) Capital Reserve R8,000; (b)
5Journalisethe following :
issued at a premium of 5per share
(a) YLtd. forfeited 400shares of 100each,non-payment of a first call of 20
(to be paid at the time of allotment) for
Qlso.)A company issued for public subscription 60,000 equity shares of T10 each
at a prêmm of {4 per share, payable as under : 74 on Application; R5 on Allotment
(including premium), 2.50 on First Call and 2.50 on Final Call.
Applications were received for 75,000 cquity sharcs. The shares were allotted
pro-rata to the applicants for 70,000shares, the remaining applications being rejected
Money over-paid on applications was utilised towards sums due on allotment.
A. towhom 1,200shares were allotted failed to pay allotment and calls money and
B. to whom 1,800 shares were allotted failed to pay two calls. These shares weru
subsequently forfeited after the final call was made. All the forfeited shares were sold
to Rajesh as fully paid-up at ?11 per share.
Prepare Cash Book and journal entries required to record the above transactions.
[Ans. Amount received on Allotment 2,54,800; Capital Reserve 14,600. Bank
Balance 8,52,800.]
Hins Premiumof 4,800 due on A's shares will be debited in the entry of forfeiture.
g1Suzuki Limited issued a prospectus inviting applications for 60,000 shares
of 10 cach at a premium of 30% payable as follows : On Application 3.50; On
Allotment 5.50 (including premium),: On First Call 2 and on Second Call 72.
Applicationswere received for 95,000 shares and allotment was made pro-rata to
applicants of 80,000 shares. Money over-paid on applictions were employed on
account of sums due on allotment.
X, to whom 1,500 shares were allotted failed to pay the allotment money and on
his subsequent failure to pay the First Call his shares were forfeited. Y, the holder of
2,400 shares failed to pay the two calls and his shares were forfeited after the Second
Call. Of the shares forfeited, 3,000 shares were sold to Z as fully paid, Z paying 8.50
per share,the whole of Ysshare being included.
Give journal entries and prepare Bank Account.
[Ans. Cash received on allotment 72,53,500;Balance of Share Forfeiture Account
74,200: Capital Reserve 12,700; Securities Premium Reserve 1,75,500; Cash at
Bank 7,83,400.J
Hint Securities Premium Reserve A/c will be debited at the time of forteiture ot "s
shares.]
t)SK Ltd. invited applications for issuing 3,20. 00 equity shares of 10 each
at a premiúm of 5 per share. The amount was payable as follows :
On application -3 per share (including premium ? lper share) 2
On allotment-*5pèr share (including premiu n2 per share) 3
On first and final call Balance.
Applications for 4,00,000shares were received. Applications for 40,000 shares
were rejected and application money refunded. Shares were allottedon pro-ratabasis
to the remaining applicants. Excess money received with applications was adjusted
towards sums due on allotments. Jeevan holding 800 shares failed to pay the allotment
money and his shares were immediately forfeited. Afterwards final call was made.
Ganesh who had applied for 2,700 shares failed to pay the final call. His shares were
also forfeited. Out of the Torfeited share_ 1,500shares were re-issued at 78 per share
fully paid up. The re-issued shares included allthe forfeited shares of Jeevan.
Assuming that the Company maintains "Calls in Arrears Account' pass necessary
Journal entries for the above transactions in the books of the company.
(C.B.S.E. 2016, All India)
[Ans. Amount received on allotment 14,76,300; Balance of Share Forfeiture
Account transferred to Capital Reserve 5,400 73,000 =2,400.
Hint. Securities Premium Reserve A/c will be debited from ,600 at the time of forfeiture
of Jeevan's shares and from 74,800 at the time of forfeiture of Ganesh's shares.
Q.64)Modern Ltd. issued a prospectus inviting applications for 2,00,000 shares
of 10each at a premium of 6 per share, payable as follows :
OnApplication 75(including premium 2)
On Allotment 5 (including premium 2)
On Ist Call 3 (including premium 1)
On IInd & Final Call 3 (including premium 1)
Applications were received for 2,60,000 shares and pro-rata allotment was made
to the applicants for 2,50,000 shares. Excess money paid on applications for these
shares was utilised towards allotment.
A, who applied for 1,000 shares, failed to pay the allotment money and his shares
were forfeited after allotment.
B. who applied for 1,500 shares, failed to pay the two calls and his shares were
also forfeited.
Of the shares forfeited, 1,800shares were re-issued as fully paid up for IS per
share, the whole of B's share being included. Prepare Cash Book and Journal.
|Ans.Cash at Bank 32, 12,000; Cash received on allotment 7,47,000; Balance
f Share Forfeiture A/e 850; Capital Reserve 9,750; Balance of' Securities Premium
Reserve Alc 12,03,400.|
Hint. SccuriticsPremium Rescrve A/c will be debited from I,600 at the time of forieiture
of4'sshares and from 2,400 at the time of forfeiture of B'sshares.|
Q65)x Ltd. invitcd applications for issuing 75,000 equity shares of ?10 cach at
apremium of *5 per share. The anmount was payable as follows:
On application and allotment9 per share (including premium)
On first and final call the balance amount.
Applications for 3,00,000shares were received. Applications for 2,00,000 shares
were rejected and money refunded. Shares were allotted on pro-rata basis to the
remaining applicants. The first and final call was made. The amount was duly received
except on 1,500 shares applied by Ravi. His shares were forfeited. The forfeited shares
werere-issued at a discount ofR4 per share.
Excess application and allotment money can be utilised for calls.
Pass necessary journal entries for the above transactions in the books ofX Ltd.
(C.B.S.E. 2014, OutsideDelhi)
JAns. Amount received on First and Final Call 2,21,625; Capital Reserve
3,375.]
Hint : Securities Premium Reserve Alc will not be debited at the time of forfeiture of
shares.
Q XLtd. invited applications for 4,00,000 shares of 10 each. The shares
were issued at a premium of7 per share. The amount was payable as follows :
On Application &Allotment 99 per share (including premium 4)
On First & Final Call The balance amount (including premium)
Applications were received for 5,70,000 shares and the allotment was made as
under :
(1) To applicants for 3,50,000 shares : 2,50,000 shares on pro-rata basis
(ii) To applicants for 2,00,000shares : 1,50,000 shares on pro-rata basis
(ii)To applicants for 20,000 shares : NIL
Excess application and allotment money could be utilized for calls.
A, whobelonged to the first category and was allotted 500shares, failed to pay the
first call money. B, who belonged to the second category and was allotted 300shares
also failed to pay the first call money. Their shares were forfeited and were re-issued
@E15 per share fully paid-up.
Pass necessary Cash-Book and Journal entries.
(Ans. Cash received on first call18,46,300; Capital Reserve T6,700; Cash at
Bank 68,08,300.]
Note. It has been assumed that the entire excess application and allotment money is
exclusively for share capital and hence 'Securities Premium Reserve Account' has been debited
in the entry for forfeiture.
Q.(72) Durga Ltd. invited applications for issuing 1,00,000equity shares of ?10
each at par. The amount was payable as follows
On Application 2per share.
On Allotment {3per share.
On First and Final CallS per share.
Applications were received for 2,80,000 shares. Applications for 30,000 shares
were rejected and the money refunded. Alotment was made to the remairing
applicants as follows.
Category No. of Shares Applied No. of Shares Allotted
I 1,50,000 85,000
II 1,00,000 15,000
Excess money received with applications was adjusted towards sums due on
allotment and first and final call. Alcalls were made and were duly received except
the final callby a shareholder belonging to Category Iwho has applied for 300shares.
His shares were forfeited. The forfeited shares were re-issued ata premium of 30%
fully paid up.
Pass necessary Journalentries for the above transactions in the book of Durga Ltd.
Open calls in-arrears and calls in advance account wherever required.
[Ans. Net amount received on allotment 1,25,000; Net amount received on final
call 4,24,150; Capital Reserve 850.]
Hint : Excess application money transferred to Share Allotment A/c : 1,75,000
Excess application money transferred to Calls in Advance A/c: 75.000
Excess application money returned 1,10,000
Calls in Arrears 850.
Kochi Silk Ltd. issued a prospectus inviting applications for 40,000 shares
of 10 each at a premium of ?8per share, payable as follows:
On Application 76 (including 2 premium)
On Allotment Z6 (including 2 premium)
On First Call 73 (including ?2 premium)
On Second & Final Call1 73 (including 2 premium)
Applications were received for 80,000 shares and pro-rata allotment was made on
the applications for 70,000 shares. It was decided to utilise excess application money
towards the sums due on allotment.
X, to whom 1,200 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 3,500 shares failed to pay the two calls and on his such failure,
his shares were also forfeited.
Of the shares forfeited, 2,500 shares were reissued as fully paid up for ?9 per
share, the whole of Ys shares being included. Prepare Cash Book and Journal entries.
[Ans. Cash at Bank 7,21,500; Net amount received on allotment 58,200;
Capital Reserve 17,500.]
Hints :
() Out of excess application money of ?5,400, an amount of Z4,800 is a part of share
capital and the balance of T600 is a part of securities premium reserve.
(ii) Entry for forfeiture ofXs shares :
Share Capital A/c (1,200 x 9) Dr. 10,800
Securities Premium Reserve A/c
(1,200 x 74 = 74,800 - Z600) Dr. 4,200
To Share Allotment Alc 1.800
To Share First Call A/c 3,600
To Share Forfeiture Alc 9,600
(Refer Illustration 80for Solution)

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