Class 12 Samacheer Kalvi students, here are the text book solutions for Chapter 7, Company Accounts. Please revise the journal entries well before you start working out the problems. If you have any doubts, please reach out to us in the comments section.
I Multiple choice questions
| 1. A preference share is one | |
| (i) which carries preferential right with respect to payment of dividend at fixed rate | (ii) which carries preferential right with respect to repayment of capital on winding up |
| (a) Only (i) is correct | (b) Only (ii) is correct |
| (c) Both (i) and (ii) are correct | (d) Both (i) and (ii) are incorrect |
| 2. That part of share capital which can be called up only on the winding up of a company is called: | |
| (a) Authorised capital | (b) Called up capital |
| (c) Capital reserve | (d) Reserve capital |
| 3. At the time of forfeiture, share capital account is debited with | |
| (a) Face value | (b) Nominal value |
| (c) Paid up amount | (d) Called up amount |
| 4. After the forfeited shares are reissued, the balance in the forfeited shares account should be transferred to | |
| (a) General reserve account | (b) Capital reserve account |
| (c) Securities premium account | (d) Surplus account |
| 5. The amount received over and above the par value is credited to | |
| (a) Securities premium account | (b) Calls in advance account |
| (c) Share capital account | (d) Forfeited shares account |
| 6. Which of the following statement is false? | |
| (a) Issued capital can never be more than the authorised capital | (b) In case of under subscription, issued capital will be less than the subscribed capital |
| (c) Reserve capital can be called at the time of winding up | (d) Paid up capital is part of called up capital |
| 7. When shares are issued for purchase of assets, the amount should be credited to | |
| (a) Vendor’s A/c | (b) Sundry assets A/c |
| (c) Share capital A/c | (d) Bank A/c |
| 8. Match the pair and identify the correct option | |
| (1) Under subscription - (i) Amount prepaid for calls | (2) Over subscription - (ii) Subscription above the offered shares |
| (3) Calls in arrear - (iii) Subscription below the offered shares | (4) Calls in advance - (iv) Amount unpaid on calls |
| (i) (ii) (iii) (iv) (a) 1 2 3 4 | (i) (ii) (iii) (iv) (b) 3 2 4 1 |
| (i) (ii) (iii) (iv) (c) 4 3 2 1 | (i) (ii) (iii) (iv) (d) 3 1 2 4 |
| 9. If a share of Rs. 10 on which Rs. 8 has been paid up is forfeited. Minimum reissue price is | |
| (a) Rs. 10 per share | (b) Rs. 8 per share |
| (c) Rs.5 per share | (d) Rs. 2 per share |
| 10. Supreme Ltd. forfeited 100 shares of Rs. 10 each for non-payment of final call of Rs. 2 per share. All these shares were re-issued at Rs. 9 per share. What amount will be transferred to capital reserve account? | |
| (a) Rs. 700 | (b) Rs. 800 |
| (c) Rs. 900 | (d) Rs. 1,000 |
II Very short answer questions
1. What is a share?
Ans: The capital of a company is divided into small units of fixed amount. These units are called shares.
2. What is over-subscription?
Ans: When the number of shares applied for is more than the number of shares offered for subscription, it is said to be over subscription.
3. What is meant by calls in arrear?
Ans: When a shareholder fails to pay the amount due on allotment or on calls, the amount remaining unpaid is known as calls in arrears.
4. Write a short note on securities premium account.
Ans: When a company issues shares at a price more than the face value (nominal value), the shares are said to be issued at premium. The excess is called as premium amount and is transferred to securities premium account. The amount of securities premium may be included in application money or allotment money or in a call. Securities premium account is shown under reserves and surplus as a separate head in the Note to Accounts to the balance sheet.
5. Why are the shares forfeited?
Ans: When a shareholder defaults in making payment of allotment and/or call money, the shares may be forfeited.
III Short answer questions
1. State the differences between preference shares and equity shares.
| Preference Shares | Equity Shares |
| Have preference towards payment of dividend at a fixed rate during the lifetime of the company. | No preferential right; dividend rate is not fixed and depends on profits. |
| Have preference towards repayment of capital on winding up. | Paid after preference shareholders on winding up. |
2. Write a brief note on calls in advance.
Ans: The excess amount paid over the called up value of a share is known as calls in advance. It is the excess money paid on application or allotment or calls. Such excess amount can be returned or adjusted towards future payment. If the company decides to adjust such amount towards future payment, the excess amount may also be transferred to a separate account called calls in advance account.
Calls in advance does not form part of the company’s share capital and no dividend is payable on such amount. In the balance sheet, it should be shown under current liabilities.
As per Section 50 of the Indian Companies Act, 2013, the company can accept calls in advance only if it is authorised by its Articles of Association. Interest may be paid on calls in advance if the Articles of Association so provides, not exceeding 12% per annum.
3. What is reissue of forfeited shares?
Shares forfeited can be reissued by the company. The shares can be reissued at any price. But, the reissue price cannot be less than the amount unpaid on forfeited shares.
If the reissue price is more than the amount unpaid on forfeited shares, it results in profit on reissue which is treated as capital profit and is transferred to capital reserve account.
When only a part of the forfeited shares are reissued, the proportionate amount of profit on the shares reissued should be transferred to capital reserve account.
The remaining amount in the forfeited shares account is shown under share capital as a separate head under share capital in the Note to Accounts to the balance sheet.
4. Write a short note on (a) Authorised capital (b) Reserve capital
(a) Authorised capital: It means such capital as is authorised by the memorandum of association. It is the maximum amount which can be raised as capital. It is also known as registered capital or nominal capital.
(b) Reserve capital: The company can reserve a part of its subscribed capital to be called up only at the time of winding up. It is called reserve capital.
5. What is meant by issue of shares for consideration other than cash?
A company may issue shares for consideration other than cash when the company acquires fixed assets such as land and buildings, machinery, etc. A company may also issue shares as consideration for the purchase of business, to promoters for their services and to brokers and underwriters for their commission.
IV Exercises
1. Progress Ltd. issued 50,000 ordinary shares of Rs. 10 each, payable Rs. 2 on application, Rs. 4 on allotment, Rs. 2 on first call and Rs. 2 on final call. All the shares are subscribed and amount was duly received. Pass journal entries.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 1,00,000 | ||
| To share application a/c | 1,00,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 2,00,000 | ||
| To Share capital a/c | 2,00,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 2,00,000 | ||
| To Share allotment a/c | 2,00,000 | ||
| (allotment money received) | |||
| Share First Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,00,000 | ||
| To Share first call a/c | 1,00,000 | ||
| (share first call money received) | |||
| Share Final Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share final call money due) | |||
| Bank a/c Dr. | 1,00,000 | ||
| To Share final call a/c | 1,00,000 | ||
| (share final call money received) |
Under subscription
2. Sampath company issued 25,000 equity shares at Rs. 10 per share payable Rs. 3 on application, Rs. 4 on allotment, Rs. 3 on first and final call. The public subscribed for 24,000 shares. The directors allotted all the 24,000 shares and received the money duly. Pass necessary journal entries.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 72,000 | ||
| To share application a/c | 72,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 72,000 | ||
| To Share capital a/c | 72,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 96,000 | ||
| To Share capital a/c | 96,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 96,000 | ||
| To Share allotment a/c | 96,000 | ||
| (allotment money received) | |||
| Share First Call a/c Dr. | 72,000 | ||
| To Share capital a/c | 72,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 72,000 | ||
| To Share first call a/c | 72,000 | ||
| (share first call money received) |
Over subscription
3. Saranya Ltd. issued 20,000 equity shares of Rs. 10 each to the public at par. The details of the amount payable on the shares are as follows:
On application Rs. 3 per share
On allotment Rs. 4 per share
On first and final call Rs. 3 per share
Application money was received on 30,000 shares. Excess application money was refunded immediately. Pass journal entries to record the above.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 90,000 | ||
| To share application a/c | 90,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 60,000 | ||
| To Share capital a/c | 60,000 | ||
| (application money transferred to capital a/c) | |||
| Share application a/c Dr. | 30,000 | ||
| To Bank a/c | 30,000 | ||
| (excess application money transferred) | |||
| Share allotment a/c Dr. | 80,000 | ||
| To Share capital a/c | 80,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 80,000 | ||
| To Share allotment a/c | 80,000 | ||
| (allotment money received) | |||
| Share First and Final Call a/c Dr. | 60,000 | ||
| To Share capital a/c | 60,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 60,000 | ||
| To Share first and final call a/c | 60,000 | ||
| (share first call money received) |
4. Gaja Ltd issued 40,000 equity shares of Rs. 10 each to the public payable Rs. 2 on application, Rs. 5 on allotment and Rs. 3 on first and final call. Applications were received for 50,000 shares. The Directors decided to allot 40,000 shares on pro rata basis and surplus of application money was utilised for allotment. Pass journal entries assuming that the amounts due were received.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 1,00,000 | ||
| To share application a/c | 1,00,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 20,000 | ||
| To Share allotment a/c | 20,000 | ||
| (excess application money utilised towards allotment) | |||
| Share application a/c Dr. | 80,000 | ||
| To Share capital a/c | 80,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 2,00,000 | ||
| To Share capital a/c | 2,00,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 2,00,000 | ||
| To Share allotment a/c | 2,00,000 | ||
| (allotment money received) | |||
| Share First and Final Call a/c Dr. | 1,20,000 | ||
| To Share capital a/c | 1,20,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,20,000 | ||
| To Share first and final call a/c | 1,20,000 | ||
| (share first call money received) |
5. Lalitha Ltd. offered 30,000 equity shares of Rs. 10 each to the public payable Rs. 2 per share on application, Rs. 3 on share allotment and the balance when required. Applications for 50,000 shares were received on which the directors allotted as:
Applicants for 10,000 shares – Full
Applicants for 35,000 shares – 20,000 shares (excess money will be utilised for allotment)
Applicants for 5,000 shares – Nil
All the money due was received. Pass journal entries upto the receipt of allotment.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 1,00,000 | ||
| To share application a/c | 1,00,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 10,000 | ||
| To bank a/c | 10,000 | ||
| (excess application money refunded) | |||
| Share application a/c Dr. | 30,000 | ||
| To Share allotment a/c | 30,000 | ||
| (excess application money utilised towards allotment) | |||
| Share application a/c Dr. | 60,000 | ||
| To Share capital a/c | 60,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 90,000 | ||
| To Share capital a/c | 90,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 60,000 | ||
| To Share allotment a/c | 60,000 | ||
| (allotment money received) |
| Shares Applied | Shares Alloted | Application Money Received | Application money | Application Allotment Money | Refund |
|---|---|---|---|---|---|
| 10,000 | 10,000 | 20,000 | 20,000 | - | |
| 35,000 | 20,000 | 70,000 | 40,000 | 30,000 | |
| 5,000 | - | 10,000 | - | - | 10,000 |
Calls in advance
6. Anjali Flour Ltd. with a registered capital of Rs. 4,00,000 in equity shares of Rs. 10 each, issued 30,000 of such shares; payable Rs. 2 per share on application, Rs. 5 per share on allotment and Rs. 3 share on first call. The issue was duly subscribed.
All the money payable was duly received but on allotment, one shareholder paid the entire balance on his holding of 500 shares. Give journal entries to record the transactions.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 60,000 | ||
| To share application a/c | 60,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 60,000 | ||
| To Share capital a/c | 60,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 1,50,000 | ||
| To Share capital a/c | 1,50,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 1,51,500 | ||
| To Share allotment a/c | 1,50,000 | ||
| To Calls-in-advance a/c | 1,500 | ||
| (allotment money received) | |||
| Share First and Final Call a/c Dr. | 90,000 | ||
| To Share capital a/c | 90,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 88,500 | ||
| Calls-in-advance a/c Dr. | 1,500 | ||
| To Share first and final call a/c | 90,000 | ||
| (share first call money received) |
Calls in arrear
7. Muthu Ltd. issued 50,000 equity shares of Rs. 10 each payable as follows: Rs. 2 on application; Rs. 4 on allotment; Rs. 4 on first and final call.
All money were duly received except one shareholder holding 1,000 shares failed to pay the call money. Pass the necessary journal entries for calls by using calls in arrear account.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Share First and Final Call a/c Dr. | 2,00,000 | ||
| To Share capital a/c | 2,00,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,96,000 | ||
| Calls-in-advance a/c Dr. | 4,000 | ||
| To Share first and final call a/c | 2,00,000 | ||
| (share first call money received) |
Forfeiture of Shares
8. Arjun was holding 1,000 equity shares of Rs. 10 each of Vanavil Electronics Ltd, issued at par. He paid Rs. 3 on application, Rs. 4 on allotment but could not pay the first and final call of Rs. 3. The directors forfeited the shares for nonpayment of call money. Give Journal entry for forfeiture of shares.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Share capital a/c Dr. | 10000 | ||
| To Shares forfeited a/c | 7000 | ||
| To Share First and Final call a/c | 3000 | ||
| (1000 shares forfeited) |
9. Lakshith was holding 50 shares of Rs. 10 each on which he paid Rs. 2 on application but could not pay Rs. 4 on allotment and Rs. 2 on first call. Directors forfeited the shares after the first call. Give journal entry for recording the forfeiture of shares.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Share capital a/c Dr. | 400 | ||
| To Shares forfeited a/c | 100 | ||
| To Share allotment a/c | 200 | ||
| To Share First and Final call a/c | 100 | ||
| (50 shares forfeited) |
Reissue of shares
10. Goutham Ltd. forfeited 500 equity shares of Rs. 10 each issued at par held by Ragav for nonpayment of the final call of Rs. 2 per share. The shares were forfeited and reissued to Madhan at Rs. 8 per share. Show the journal entries for forfeiture and reissue.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Share capital a/c Dr. | 5000 | ||
| To Shares forfeited a/c | 4000 | ||
| To Share Final call a/c | 1000 | ||
| (500 shares forfeited) | |||
| Bank a/c Dr. (500x8) | 4000 | ||
| Shares forfeited a/c Dr. (500x2) | 1000 | ||
| To Share capital a/c | 5000 | ||
| (500 shares were reissued) | |||
| Shares forfeited a/c Dr. | 3000 | ||
| To Capital Reserve a/c | 3000 | ||
| (profit on re-issue transferred to capital reserve) |
11. Nivetha Ltd. forfeited 1,000 equity shares of Rs. 10 each for non payment of call of Rs. 4 per share. Of these 800 shares were reissued @ Rs. 7 per share. Pass journal entries for forfeiture and reissue.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Share capital a/c Dr. | 10000 | ||
| To Shares forfeited a/c | 6000 | ||
| To Share Final call a/c | 4000 | ||
| (1000 shares forfeited) | |||
| Bank a/c Dr. (800x7) | 5600 | ||
| Shares forfeited a/c Dr. (800x3) | 2400 | ||
| To Share capital a/c | 8000 | ||
| (800 shares were reissued) | |||
| Shares forfeited a/c Dr. | 2400 | ||
| To Capital Reserve a/c | 2400 | ||
| (profit on re-issue transferred to capital reserve) |
12. Nathiya Textiles Ltd. forfeited 100 shares of Rs. 10 each, Rs. 8 called up, on which Mayuri had paid application and allotment money of Rs. 6 per share. Of these 75 shares were re-issued to Soundarya by receiving Rs. 7 per share paid up as Rs. 8 per share. Pass journal entries for forfeiture and reissue.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Share capital a/c Dr. | 800 | ||
| To Shares forfeited a/c | 600 | ||
| To Share First call a/c | 200 | ||
| (100 shares forfeited) | |||
| Bank a/c Dr. (75x7) | 525 | ||
| Shares forfeited a/c Dr. | 225 | ||
| To Share capital a/c | 750 | ||
| (75 shares were reissued) | |||
| Shares forfeited a/c Dr. | 375 | ||
| To Capital Reserve a/c | 375 | ||
| (profit on re-issue transferred to capital reserve) |
13. Simon Ltd issued 50,000 equity shares of Rs. 10 each at par payable on application Rs. 1 per share, on allotment Rs. 5 per share, on first call Rs. 2 per share and on second and final call Rs. 2 per share. The issue was fully subscribed and all the amounts were duly received with the exception of 2,000 shares held by Chezhian, who failed to pay the second and final call. His shares were forfeited and reissued to Elango at Rs. 8 per share. Journalise the above transactions.
| Date | Debit(Rs.) | Credit(Rs.) | |
|---|---|---|---|
| Bank a/c Dr. | 50,000 | ||
| To share application a/c | 50,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 50,000 | ||
| To Share capital a/c | 50,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 2,50,000 | ||
| To Share capital a/c | 2,50,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 2,50,000 | ||
| To Share allotment a/c | 2,50,000 | ||
| (allotment money received) | |||
| Share First Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,00,000 | ||
| To Share first call a/c | 1,00,000 | ||
| (share first call money received) | |||
| Share Final Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share final call money due) | |||
| Bank a/c Dr. | 96,000 | ||
| To Share final call a/c | 96,000 | ||
| (share final call money received) | |||
| Share capital a/c Dr. | 20000 | ||
| To Shares forfeited a/c | 16000 | ||
| To Share Final call a/c | 4000 | ||
| (2000 shares forfeited) | |||
| Bank a/c Dr. | 16000 | ||
| Shares forfeited a/c Dr. | 4000 | ||
| To Share capital a/c | 20000 | ||
| (2000 shares were reissued) | |||
| Shares forfeited a/c Dr. | 12000 | ||
| To Capital Reserve a/c | 12000 | ||
| (profit on re-issue transferred to capital reserve) |
14. Kanchana Ltd. issued 50,000 equity shares of Rs. 10 each payable as under.
On application Rs. 1
On allotment Rs. 5
On first call Rs. 2
On second and final call Rs. 2
Applications were received for 70,000 shares. Applications for 8,000 shares were rejected and allotment was made proportionately towards remaining applications. The directors made both the calls and the all the amount were received except the final call on 1,500 shares which were subsequently forfeited. Later 1,200 forfeited shares were reissued by receiving Rs. 8 per share. Give journal entries.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 70,000 | ||
| To share application a/c | 70,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 8,000 | ||
| To bank a/c | 8,000 | ||
| (excess application money refunded) | |||
| Share application a/c Dr. | 50,000 | ||
| To Share capital a/c | 50,000 | ||
| (application money transferred to capital a/c) | |||
| Share application a/c Dr. | 12,000 | ||
| To Share allotment a/c | 12,000 | ||
| (excess application money utilised towards allotment) | |||
| Share allotment a/c Dr. | 2,50,000 | ||
| To Share capital a/c | 2,50,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 2,38,000 | ||
| To Share allotment a/c | 2,38,000 | ||
| (allotment money received) | |||
| Share First Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,00,000 | ||
| To Share first call a/c | 1,00,000 | ||
| (share first call money received) | |||
| Share Final Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share final call money due) | |||
| Bank a/c Dr. | 97,000 | ||
| To Share final call a/c | 97,000 | ||
| (share final call money received) | |||
| Share capital a/c Dr. | 15000 | ||
| To Shares forfeited a/c | 12000 | ||
| To Share Final call a/c | 3000 | ||
| (1500 shares forfeited) | |||
| Bank a/c Dr. | 9600 | ||
| Shares forfeited a/c Dr. | 2400 | ||
| To Share capital a/c | 12000 | ||
| (1200 shares were reissued) | |||
| Shares forfeited a/c Dr. | 7200 | ||
| To Capital Reserve a/c | 7200 | ||
| (profit on re-issue transferred to capital reserve) |
Shares issued at premium
15. Viswanath Furniture Ltd. invited applications for 20,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable.
Rs. 2 on application
Rs. 5 (including premium) on allotment
Rs. 5 on first and final call
There was over subscription and applications were received for 30,000 shares and the excess applications were rejected by the directors. All the money due were received. Pass the journal entries.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 60,000 | ||
| To share application a/c | 60,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 40,000 | ||
| To Share capital a/c | 40,000 | ||
| (application money transferred to capital a/c) | |||
| Share application a/c Dr. | 20,000 | ||
| To bank a/c | 20,000 | ||
| (excess application money refunded) | |||
| Share allotment a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 80,000 | ||
| To Securities Premium a/c | 20000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 1,00,000 | ||
| To Share allotment a/c | 1,00,000 | ||
| (allotment money received) | |||
| Share First and Final Call a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 1,00,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,00,000 | ||
| To Share first and final call a/c | 1,00,000 | ||
| (share first call money received) |
16. United Industries Ltd. issued equity shares of Rs. 10 each at 10% premium payable Rs. 3 on application, Rs. 4 on allotment (including premium), Rs. 2 on first call and Rs. 2 on second and final call.
Journalise the transactions relating to forfeiture of shares for the following situations:
(i) Manoj who holds 250 shares failed to pay the second and final call and his shares were forfeited.
(iii) Manoj who holds 250 shares failed to pay the allotment money and first call money and his shares were forfeited after the first call.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| (i)Share capital a/c Dr. | 2500 | ||
| To Shares forfeited a/c | 2000 | ||
| To Share Final call a/c | 500 | ||
| (250 shares forfeited) | |||
| (ii)Share capital a/c Dr. | 2500 | ||
| To Shares Premium a/c | 250 | ||
| To Share allotment a/c | 1000 | ||
| To Share first call a/c | 500 | ||
| To Share Final call a/c | 500 | ||
| To Shares forfeited a/c | 750 | ||
| (150 shares forfeited for failure to pay allotment 1st and final call) | |||
| (iii)Share capital a/c Dr. | 2000 | ||
| To Shares Premium a/c | 250 | ||
| To Share allotment a/c | 1000 | ||
| To Share first call a/c | 500 | ||
| To Shares forfeited a/c | 750 | ||
| (250 shares forfeited for failure to pay allotment 1st and final call) |
17. Kasthuri Ltd. had allotted 20,000 equity shares of Rs. 10 each at a premium of Rs. 2 each to applicants of 30,000 shares on a pro rata basis. The amount payable was Rs. 3 on application, Rs. 5 on allotment (including premium of Rs. 2 each) and Rs. 2 on first call and Rs. 2 on final call. Subin, a shareholder failed to pay the first call and final call on his 500 shares. All the shares were forfeited and out of them 400 shares were reissued @ Rs. 8 per share. Pass necessary journal entries.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 30,000 | ||
| To share application a/c | 30,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 20,000 | ||
| To Share capital a/c | 20,000 | ||
| (application money transferred to capital a/c) | |||
| Share application a/c Dr. | 10,000 | ||
| To Share allotment a/c | 10,000 | ||
| (excess application money utilised towards allotment) | |||
| Share allotment a/c Dr. | 1,00,000 | ||
| To Share capital a/c | 60,000 | ||
| To Securities Premium a/c | 40000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 90,000 | ||
| To Share allotment a/c | 90,000 | ||
| (allotment money received) | |||
| Share First Call a/c Dr. | 40,000 | ||
| To Share capital a/c | 40,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 39,000 | ||
| To Share first call a/c | 39,000 | ||
| (share first call money received) | |||
| Share Final Call a/c Dr. | 40,000 | ||
| To Share capital a/c | 40,000 | ||
| (share final call money due) | |||
| Bank a/c Dr. | 39,000 | ||
| To Share final call a/c | 39,000 | ||
| (share final call money received) | |||
| Share capital a/c Dr. | 5000 | ||
| To Share first call a/c | 1000 | ||
| To Share final call a/c | 1000 | ||
| To Shares forfeited a/c | 3000 | ||
| (500 shares forfeited for failure to pay 1st and final call) | |||
| Bank a/c Dr. | 3200 | ||
| Shares forfeited a/c Dr. | 800 | ||
| To Share capital a/c | 4000 | ||
| (400 shares were reissued) | |||
| Shares forfeited a/c Dr. | 1600 | ||
| To Capital Reserve a/c | 1600 | ||
| (profit on re-issue transferred to capital reserve) |
18. Vairam Ltd. issued 60,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
On application Rs. 6
On allotment Rs. 4 (including premium)
On first and final call Rs. 2
Issue was fully subscribed and the amounts due were received except Saritha to whom 1,000 shares were allotted who failed to pay the allotment money and first and final call money.
Her shares were forfeited. All the forfeited shares were reissued to Parimala at Rs. 7 per share. Pass journal entries.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 3,60,000 | ||
| To share application a/c | 3,60,000 | ||
| (application money received) | |||
| Share application a/c Dr. | 3,60,000 | ||
| To Share capital a/c | 3,60,000 | ||
| (application money transferred to capital a/c) | |||
| Share allotment a/c Dr. | 2,40,000 | ||
| To Share capital a/c | 1,20,000 | ||
| To Securities Premium a/c | 1,20,000 | ||
| (share allotment due) | |||
| Bank a/c Dr. | 2,36,000 | ||
| To Share allotment a/c | 2,36,000 | ||
| (allotment money received) | |||
| Share First Call a/c Dr. | 1,20,000 | ||
| To Share capital a/c | 1,20,000 | ||
| (share first call money due) | |||
| Bank a/c Dr. | 1,18,000 | ||
| To Share first call a/c | 1,18,000 | ||
| (share first call money received) | |||
| Share capital a/c Dr. | 10,000 | ||
| Securities Premium a/c | 2,000 | ||
| To Share allotment a/c | 4,000 | ||
| To Share first call a/c | 2,000 | ||
| To Shares forfeited a/c | 6,000 | ||
| (1000 shares forfeited) | |||
| Bank a/c Dr. | 7,000 | ||
| Shares forfeited a/c Dr. | 3,000 | ||
| To Share capital a/c | 10,000 | ||
| (1000 shares were reissued @Rs.7) | |||
| Shares forfeited a/c Dr. | 3,000 | ||
| To Capital Reserve a/c | 3,000 | ||
| (profit on re-issue transferred to capital reserve) |
Issue of shares for cash in lumpsum
19. Abdul Ltd. issues 50,000 equity shares of Rs. 10 each payable fully on application. Pass journal entries if shares are issued (i) at par (ii) at a premium of Rs. 3 per share.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| Bank a/c Dr. | 6,00,000 | ||
| To Share capital a/c | 5,00,000 | ||
| To Securities Premium a/c | 1,00,000 | ||
| (receipt of full amount of share capital ) |
Issue of shares for consideration other than cash
20. Paradise Ltd. purchased assets of Rs. 4,40,000 from Suguna Furniture Ltd. It issued equity shares of Rs. 10 each fully paid in satisfaction of their claim. What entries will be made if such issue is: (a) at par and (b) at premium of 10%.
| Date | Particulars | Debit(Rs.) | Credit(Rs.) |
|---|---|---|---|
| (a) Assets a/c Dr. | 4,40,000 | ||
| To Suguna Furniture a/c | 4,40,000 | ||
| (assets purchased on credit from Suguna Furniture) | |||
| Suguna Furniture a/c Dr. | 4,40,000 | ||
| To Equity Share capital a/c | 4,40,000 | ||
| (shares issued to Suguna Furniture) | |||
| (b) Assets a/c Dr. | 4,40,000 | ||
| To Equity Share capital a/c | 4,00,000 | ||
| To Securities Premium a/c | 40,000 | ||
| (shares issued to Suguna Furniture at 10% premium) |
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