Gujarat Board GSEB Textbook Solutions Class 12 Commerce Accounts Part 2 Chapter 1 Accounting for Share Capital Textbook Exercise Questions and Answers.
Gujarat Board Textbook Solutions Class 12 Accounts Part 2 Chapter 1 Accounting for Share Capital
GSEB Class 12 Accounts Accounting for Share Capital Text Book Questions and Answers
1. Select the correct option for each question :
Question 1.
At what minimum price per share company can issue shares according to current provisions of Companies Act?
(A) ₹ 100
(B) ₹ 1000
(C) ₹ 1
(D) ₹ 0.50
Answer:
(C) ₹ 1
Question 2.
For public issue of shares company has to take a permission from whom?
(A) Central government
(B) SEBI
(C) State government
(D) Reserve Bank
Answer:
(B) SEBI
Question 3.
As per SEBI guidelines, the minimum amount on each share called by company on application must be at least ………………. % of the issue price.
(A) 25.
(B) 30
(C) 5
(D) 20
Answer:
(A) 25.
Question 4.
If the company does not receive subscription for at least ……………… of the public issue, then share issue would be cancelled.
(A) 50 %
(B) 75 %
(C) 90 %
(D) 100 %
Answer:
(C) 90 %
Question 5.
At what maximum rate of percentage for premium on the face value of shares can be declared by the company on their issue shares?
(A) 10%
(B)100 %
(C) 25 %
(D) No limit
Answer:
(D) No limit
Question 6.
When shares are forfeited then amount called up on forfeited shares is ……………… .
(A) debited to share forfeiture A/c
(B) credited to share forfeiture A/c
(C) credited to share capital A/c
(D) debited to share capital A/c
Answer:
(D) debited to share capital A/c
Question 7.
What is the maximum rate of interest charged by company on calls-in-arrears as per schedule I of Table F?
(A) at 15% p.a.
(B) at 10 % p.a.
(C) at 2 % p.m.
(D) at 1 % p.m.
Answer:
(B) at 10 % p.a.
Question 8.
When all the forfeited shares are reissued then balance of share forfeiture account is transferred to ……………. account.
(A) share capital
(B) profit-loss
(C) capital reserve
(D) general reserve
Answer:
(C) capital reserve.
Question 9.
If premium amount has not been received on forfeited shares then proportionate amount of premium is …………….. .
(A) debited to securities premium account
(B) credited to securities premium account
(C) credited to capital reserve account
(D) debited to share capital account.
Answer:
(A) debited to securities premium account.
Question 10.
Which of the following is not shown under the heading ‘Share Capital’ in a balance sheet?
(A) Authorised capital
(B) Issued capital
(C) Reserve capital
(D) Subscribed capital
Answer:
(C) Reserve capital
2. Answer in two or three sentences :
Question 1.
What is share and share capital?
Answer:
Capital which can be divided into transferable small denominations are known as shares. This asset is transferable and movable. This capital is known as share capital.
Question 2.
What is securities premium?
Answer:
When company issues shares at a price higher than the face value, the shares are said to be issued at premium. The amount thus receives is known as securities premium.
Question 3.
What is meant by share forfeiture?
Answer:
Due to any reason, if any shareholder fails to pay the amount due on allotment or on any call within the informed specified period by company, then company can forfeit his share by completing due formalities. So, a process of forfeiture or cancellation of shares by directors of company is called forfeiture of shares.
Question 4.
In which circumstances do companies issue shares for consideration other than cash?
Answer:
In following situations company can issue shares for consideration other than cash.
- For purchasing of any assets or business, company does not pay cash and issue shares.
- When company issues shares in lieu of remuneration payable to promoters.
- When company issues bonus shares to existing shareholders.
- When company issues shares towards under-writing commission to underwriters.
Question 5.
Under which circumstances do companies re-issued forfeited shares Here, (Que. 4 and Que. 5 are same so we answered Q.5 as per Gujarati book)
Answer:
If there is provision for reissue of forfeited shares then directors of company can reissue the forfeited shares at discount or at premium or at par. At the time of reissue of forfeited shares, company can give maximum discount to new shareholders upto the amount foreited.
Question 6.
What is under-subscription and over-subscription of shares?
Answer:
When applications are received for less number of shares than the shares issued for public subscription, it is known as under subscription. When applications are received for more number of shares than the shares issued for public subscription, it is known as oversubscription.
Question 7.
What is pro-rata allotment of shares?
Answer:
When shares are allotted against the share application, in face or in some proportion or no share allotted then it is known as prorate allotment of shares. In this situation, excess amount received at the time of application will be credited to share allotment A/c and if amount is still in excess, then it will be credited to share calls and then remaining amount is returned to applicants.
Question 8.
Give any two uses of amount of securities premium reserve.
Answer:
The amount of securities premium reserve can be used only for the following purposes :
- To write off the preliminary expenses of the company.
- For issuing fully paid bonus shares to the shareholders of the company.
- For buyback of company’s own shares.
- For writing off expenses incurred at the time of issue of shares or debentures of the company.
3. Give differences :
Question 1.
Over-subscription and Under subscription :
Answer:
Following are the points of differences for oversubscription and under-subscription :
| Oversubscription | Under subscription |
| (1) If applications are received for more number of shares then the shares issued for public subscription is known as oversubscription. | (1) If applications are received for less number of shares than the shares issued for public subscription is known as under subscription. |
| (2) As company can not allot more shares than the shares issued, it has to refund excess application money to applicants of shares. | (2) If company fails to get minimum subscription – 90% of amount of total subscription – then whole issue will be considered as fail issue and money received there on should be returned. |
| (3) Here, against the share application company can allot full number of shares, can not allot any number of shares or can allot partially number of shares. | (3) Here, in most of the cases all the shares are allotted by company for the share applied. |
| (4) In case of oversubscription, like this things never happened. | (4) If company fails to get minimum subscription, company should return received amount within 15 days otherwise interest at 15% p.a. has to be paid for each day. |
Question 2.
Preference share and Equity share :
Answer:
Points of difference for Preference shares and Equity shares are as follows :
| Preference Share | Equity Share |
| (1) Dividend on preference shares are paid at a fixed rate. | (1) The rate of dividend on equity shares is not fixed. |
| (2) The arrears of dividend is paid against company’s profit in future. | (2) The arrears of dividend can not be accumulated, so it is not paid against company’s profit in future. |
| (3) Preference shareholders do not have any voting right. | (3) Equity shareholders have voting rights. |
| (4) Preference shareholders do not have any right in the management of company. | (4) Equity shareholders have full right to participate in management of the company. |
| (5) Preference shareholders have a right to receive dividend before any dividend is paid on equity shares. | (5) Payment of dividend on equity shares is made after the payment of preference shareholders dividend. |
| (6) Preference shareholders have right to receive amount before amount returned to equity shareholders in case of winding up of business. | (6) Equity share capital is paid only after the payment to preference share capital in case of winding up of business. |
Question 3.
Reserved Capital and Capital Reserve :
Answer:
Following are the points of differences for Reserved Capital and Capital Reserve :
| Reserved Capital | Capital Reserve |
| (1) When board of directors think that they have sufficient called up capital and no further capital is needed in future then by special resolution passed in shareholder’s meeting regarding uncalled capital is kept as reserve, then that capital is called reserved capital. | (1) Reserve created from capital profit is called capital reserve. It is not created from the normal transaction of business. |
| (2) When company going to be liquidated or winding up then this amount of capital can be called from shareholders. | (2) This can not be possible in capital reserve. |
| (3) Reserved capital can be created from the starting of the company proceeding. | (3) Capital reserve can be created at any time in the business. |
| (4) If there is sufficient called up capital then only reserved capital can be created. | (4) If there is capital profit then only capital reserve can be created. |
4. Give answer of the following questions in detail:
Question 1.
What do you mean by share capital? State the types of share capital.
Answer:
Through initial public offer when capital amount is collected, it is known as share capital.
Types of share capital is as follows :
- Authorized share capital: The maximum amount which a company can accumulate by share capital during its lifetime is called authorized share capital.
- Issued share capital: The share capital issued by issue of shares out of authorized capital based on the need of the company in full or part is known as issued capital.
- Subscribed capital: The value of shares for which applications are received out of issued share capital is known as subscribed capital.
- Called up capital: Amount called up by company per share is known as called up capital.
- Uncalled capital: A capital which is not yet called from the shareholders by the board of directors of the company is called uncalled capital.
- Paid-up capital: The amount received by the company from shareholders out of called up capital is known as paid-up capital.
- Reserve capital: Amount of difference between subscribed capital and uncalled capital which directors feels that will not be required in future, is transferred as reserve by passing special resolution known as reserve capital.
Question 2.
What is a share? State the types of shares.
Answer:
Capital which can be divided into transferable small denominations which are known as share. According to companies act, a company may issue two types of shares :
(i) Equity share
(ii) Preference shares.
(i) Equity shares: The shares which are not preference shares are known as equity shares. Equity share capital is known as principal share capital of the company. Equity shareholders have voting rights and right to participate in management of the company. At the time of liquidation, equity shareholders gets amount after complete payment to preference shareholders. Company gives dividends on equity shares every year on the basis of current year’s profit.
(ii) Preference shares: Preference share is one which gives preferential right to its holder for receiving the dividend at a special rate before any dividend paid to equity shareholders.
Types of preference shares are as under :
(1) Cumulative preference shares: In case of cumulative preference shares, arrears of dividend shall be paid together with current year’s dividend in the year when there is sufficient profit.
(2) Non-cumulative preference shares: In case of non-cumulative preference shares, such arrears of dividend are not accumulated and are not paid in future.
(3) Redeemable and Irredeemable preference shares: If the amount of preference share is to be repaid by the company at the end of stipulated period, such shares are called
redeemable preference shares. A preference share which can be redeemed only at the time of liquidation of company are called irredeemable preference shares.
(4) Participating and Non-participating preference shares: Preference shareholders who hold participating preference shares get fixed rate of dividend as decided by the company.
In addition to this, they also have a right to participate dividend to equity shareholders subject to terms of participation. Preference shareholders of non-participating preference shares get only a fixed rate of dividend and do not carry a right to participate in the surplus profit or in any surplus capital.
(5) Convertible and Non-convertible preference shares: The preference shares which can be converted partly or fully into equity shares as per agreed terms at the time of issue are known as convertible preference shares. The preference shares which are not convertible into equity shares are known as non-convertible preference shares.
Question 3.
Explain in detail, the method of issuing shares by private placement.
Answer:
Sometimes the promoters of a public company are confident of raising capital through private sources and contacts. In such cases, the company does not invite the public to subscribe for it shares but make private placement of shares to promoters, their friends, their relatives etc.
When the shares are not offered to the public, the company need not issue a prospectus but issue a ‘statement in lieu of prospectus’ and must file it with the registrar at least 3 days before first allotment of either share or debenture. In case of private placement of shares, shareholders can’t sell their shares within ‘Lock-in period’.
Question 4.
Write a short note on calls-in-arrears.
Answer:
When company makes calls for allotment money or call money and if some shareholder fails to pay such money on due date, such unpaid amount is known as ‘calls in arrears’ amount. There are two methods to deal with accounting effect of calls in arrears.
(i) Without opening calls in arrears account: When company calls for instalment amount on any call, then the actual amount received from the shareholders is debited to bank account and is credited to relevant call account. When unpaid amount is received from shareholder in future, the bank account is debited and the relevant call account is credited.
(ii) By opening calls in arrears account: Under this method, the’calls in arrears’ account is opened. Any amount received from shareholders against any call is debited to bank account and amount which is not received from shareholders is debited to calls in arrears account. On a latter date when the arrears amount on call is received, bank account is debited and calls in arrears account is credited. So, at the end calls in arrears account is closed.
Question 5.
What is meant by calls-in-advance? State the provisions of it under Companies Act.
Answer:
If there is provision in the Articles of Association, a company can receive in advance a part or . whole of the uncalled amount. Since the uncalled amount is received by company in advance from shareholders, the same is credited to the calls-in-advance’ account.
Calls-in-advance is not share capital of the company, hence dividends can not be given on it. It is compulsory to pay interest on calls-in-advance amount, uptil it is settled against the call is due for payment. On pre-decided rate specified in articles of the company. If articles of the company is silent on this matter, interest is payable 12% p.a. (maximum). The interest on calls-in-advance is payable compulsorily even if there is no profit.
Question 6.
What is meant by securities premium? State the points to be kept in mind relating to securities premium.
Answer:
When company issues shares at a price higher than the face value, the shares are said to be issued at premium. The amount thus received is known as securities premium.
Example: If a company issue a share at ₹ 120 with a face value of ₹ 100 then additional amount of ₹ 20 is known as security premium. As per company act, this amount should be carried to ‘Security Premium Account’ or ‘Securities Premium Reserve Account’.
Point to be kept in mind relating to securities premium :
- There is no legal restriction on issue of shares at premium.
- The premium on issue of shares is a capital profit and not a revenue profit.
- Amount of premium can not be utilised for payment of dividend in cash.
- Company can call premium amount with application or with any calls separately or all together.
Question 5.
Vaidya Limited of Nadiad company issued 7,50,000 equity shares of ₹ 10 each and the amount thereon was payable as under: ₹ 3 per share on application, ₹ 4 per share on allotment, ₹ 3 per share on first and final call Company received applications for 7,50,000 shares and all the applicants were allotted shares. Amounts due on allotment and calls were called at appropriate time and were all received on due dates.
Pass journal entries for above transactions in the books of company.
Answer:
Necessary Calculation :
(1) At the time of Application 7,50,000 share × ₹ 3 = ₹ 22,50,000
(2) At the time of Allotment 7,50,000 share × ₹ 4 = ₹ 30,00,000
(3) At the time of first & final call 7,50,000 share × ₹ 3 = ₹ 22,50,000
Journal entries in the books of Vaidya Limited Company
Question 6.
Authorised capital of Mewada Ltd. of Himatnagar was divided into 4,00,000 equity shares of ₹ 10 each. Out of this, company-issued 3,00,000 equity shares. Amount called up per share was as under :
₹ 4 on application,
₹ 3 on allotment,
₹ 3 on final call
Company received applications for 3,60,000 shares. Excess applications were rejected and money paid thereon was refunded to applicants. All the sums due on allotment and final call were received in full except final call on 2,000 equity shares held by Aasha.
Pass journal entries in the books of company to record above transactions. Also prepare equity share capital account, equity share application account, equity share allotment account and equity share final call account.
Answer:
Necessary Calculation :
Journal entries in the books of Mevada Limited
Question 7.
Pagedar Sugar Limited of Nagpur issued 12,00,000 equity shares in the public of ₹ 10 each. Company received applications for 13,50,000 shares. Shares were allotted at a meeting of board of directors. Excess share applications were rejected and amount received thereon was refunded.
Amount called up against shares was as under : On application ₹ 2.50 per share, On allotment ₹ 2.50 per share, On first call ₹ 2 per share, On final call ₹ 3 per share.
Aishwarya, who was allotted 960 shares, could not pay first call and final call money, where Vinay, who was allotted 1,200 shares, could not pay final call money. Except this, all sums due from other shareholders were received. Aishwarya and Vinay had paid their arrears amount to company otherwards. Pass necessary journal entries to record above transactions in the books of company
without giving effect of interest.
Answer:
Necessary Calculation :
Journal entries in the books of Pagedar Sugar Limited
Question 8.
Chaudhari Agro Company of Vyara issued 5,00,000 equity shares of ₹ 10 each to public. Company called ₹ 3 per share on application, ₹ 4 per share on allotment and ₹ 3 per share on first and final call. Company received application for 5,75,000 equity shares from public. Excess applications were rejected and money paid on them was refunded.
Viral, who had applied for 2,000 shares, had paid full amount ₹ 10 per share along with application. Company had allotted him all the shares applied for. Yagnesh, who was allotted 2,500 shares, had paid amount due on first and final call along with share allotment money. Except this, amount due on allotment and calls were duly received from time to time.
Pass necessary journal entries in the books of company for above transactions.
Answer:
Calculation of amount for different instalments: ₹
Journal entries in the books of Chaudhari Agro Company
Question 9.
Nanavati Limited of Junagadh issued 3,00,000 equity shares of ₹ 10 each at a premium of ₹ 5 per share. Amount was called up as under :
On application ₹ 4 per share, On allotment ? 8 per share (including premium), On final call ₹ 3 per share.
Company received application for 3,50,000 shares. Excess applications were rejected and money paid thereon was refunded to applicants. All the sums due were received in full except allotment and final call on 3,000 equity shares held by Ishira. Pass journal entries in books of company.
Answer:
Necessary Calculation :
Journal entries in the books of Nanavati Limited
Question 10.
Vala Manuf. Limited of Dhandhuka issued 4,00,000 equity shares of ₹ 10 each at a premium of ₹ 60 per share. Amount was called up per share as under :
On application ₹ 23 (including premium ₹ 20), On allotment ₹ 34 (including premium ₹ 30), On final call ₹ 13 (including premium ₹ 10).
Company received applications for 6,00,000 shares. Excess applications were rejected and money paid thereon was refunded. Amount due on allotment and final call were called up in time. All amounts due on allotment and call were received except allotment and final call money on 500 shares held by Himmatbhai and final call money on 300 shares held by Heema. Pass necessary journal entries in books of company for above transactions.
Answer:
Necessary Calculation:
Journal entries in the books of Vala Mfg. Limited
Question 11.
Authorised capital of Mansuri Limited of Dahod was 7,00,000 equity shares of ₹ 10 each. On 4th- July, 2017, company issued 4,50,000 equity shares at a premium of ₹ 16 per share for public subscription. Amount was called up for share as under.
On 4th July, 2017 ₹ 10 per share (including premium of ₹ 6 per share) with application. On 4th August, 2017 ₹ 14 per share (including premium of ₹ 10 per share) with allotment. On 4th September, 2017 ₹ 2 per share with first and final call. The subscription was closed on 6th July, 2017 as it was fully subscribed. Board of directors allotted all the shares of share application.
Abdul holding 600 shares did not pay money due on allotment and first and final call. Where, Harun holding 400 shares had not paid first and final call money. Except this, all the sums due were received by the following dates. Share allotment money by 7th August, 2017. Share first and final call money by 7th September, 2017.
Pass necessary journal entries except for cash in the books of company for above transactions and also prepare bank account.
Answer:
Necessary Calculation :
Journal entries in the books of Mansuri Limited
Question 12.
Write journal entries in the books of company for forfeiture and reissue of forfeited shares from the following information :
(i) Company forfeited 800 equity shares of ₹ 10 each of a shareholder for non-payment of allotment money of ₹ 4 per share and call money of ₹ 3 per share. This shareholder had paid ₹ 3 per share with application. Forfeited shares were reissued at ₹ 8 per share.
(ii) R. K. Company Limited forfeited 600 shares of ₹ 10 each of Sunil. Sunil had paid application and allotment money of ₹ 5 per share, but had not paid ₹ 3 per share and ₹ 2 per share on first call and second call respectively. Out of the forfeited shares, 400 shares were reissued at ₹ 6 per share to Mittal.
(iii) A shareholder holding 3000 equity shares of ₹ 10 each has paid application money at ₹ 13 per share (including premium ₹ 10) and allotment money at ₹ 13 per share (including premium ₹ 10), his shares were forfeited for non-payment of call of ₹ 4 per share. Forfeited shares were reissued at ₹ 7 per share.
Answer:
Journal entries in the books of company
Question 13.
Write journal entries in the books of company for forfeiture and reissue of forfeited shares from the following information :
(i) Company forfeited 1200 equity shares of ₹ 10 each held by Katara for non-payment of allotment money of ₹ 14 per share (including premium ₹ 10) and first and final call money of ₹ 3 per share. Company reissued all the forfeited shares after giving maximum permissible discount. These shares were purchased by Kanu.
(ii) Ramesh holds 600 equity shares of ₹ 10 each in company. He had paid application money at ₹ 3 per share and allotment money at ₹ 2.50 per share but could not pay first call money of ₹ 2 per share. Company forfeited above shares before making final call after necessary formalities. Company reissued all these shares at a discount of ₹ 4 per share.
(iii) Company forfeited 400 equity shares of ₹ 100 each, issued at a premium of 20 % on face value. ₹ 80 per share (including premium) are called up on these shares. For non-payment of allotment money at ₹ 50 (including premium) these shares were forfeited before making share first and final call. These shares reissued before first and final call at ₹ 36,000 as fully paid up.
Answer:
Journal entries in the books of company
Question 14.
Raj Machine Limited issues 12,00,000 equity shares of ₹ 10 each on which amount was payable as under:
₹ 3 per share on application, ₹ 4 per share on allotment, ₹ 3 per share on first and final call. Company received application for 14,70,000 shares from public. Excess applications were rejected and money paid on them was refunded. Aakash, who was allotted 2,000 shares, did not pay allotment and final call money. Sunny, who was allotted 1,200 shares, did not pay final call money.
Company forfeited all the shares on which calls were unpaid and reissued all forfeited shares at ₹ 7 per share as fully paid up. Pass necessary journal entries in the books of company for above transactions.
Answer:
Necessary Calculation :
Journal entries in the books of Raj Machine Limited
Question 15.
Rustom Limited of Valsad issued 2,40,000 equity shares of ₹ 10 each at a premium of ₹ 70 per share. Amount called up per share was as under :
₹ 38 on application (including premium of ₹ 35), ₹ 28 on allotment (including premium of ₹ 25) ₹ 14 on final call (including premium of ₹ 10)
All the sums due were duly received except money due on allotment and final call on 2,000 shares held by Jahangir. After carrying out necessary formalities, company forfeited Jahangir’s shares. These shares were reissued to Joshef at 40% premium as fully paid up. Pass journal entries for above transactions in the books of company.
Answer:
Necessary Calculation:
Journal entries in the books of Rustom Limited Company
Question 16.
Dharam Metals Ltd. of Jamnagar issued 8,00,000 equity shares of ₹ 10 each at a premium of ₹ 30 per share. The amount was payable as under :
₹ 13 (including premium of ₹ 10) per share on application; ₹ 23 (including premium of ₹ 20) per share on allotment; ₹ 4 per share on final call. Company received share application for 8,00,000 shares and all the applications were allotted shares.
Vipul, who was allotted 1,500 shares, did not pay money due on allotment and hence his shares were forfeited by company after allotment. Company reissued all these 1,500 shares before final call at ₹ 5 per share.
Hema, who was allotted 500 shares, did not pay money due on final call and therefore her shares were forfeited by company. Company reissued these 500 shares at maximum permissible discount. Pass journal entries for above transactions in the books of company.
Answer:
Necessary Calculation:
Journal entries in the books of Dharam Metals Ltd.
Question 17.
Siddhpur Isabgul Limited issued 6,00,000 equity shares of ₹ 10 each at a premium of ₹ 7 per share. The amount was payable as under: ₹ 10 per share on application (including premium); ₹ 4 per share on allotment; ₹ 3 per share on final call.
Applications were received for 9,00,000 shares. Excess applications were rejected and money paid thereon was refunded.
Siddharaj, who was allotted 6000 shares, did not pay money due on allotment and hence his shares were forfeited after allotment. Jaysinh, who was allotted 4,000 shares, did not pay money due on final call and hence his shares were forfeited after final call. Allotment and final call amount was received on remaining shares.
Company reissued 6000 shares of Siddharaj at ₹7 per share to Minal and 4000 shares of Jaysinh at ₹ 6 per share to Rudra.
Pass necessary journal entries in the books of company to record above transactions and also prepare shares forfeiture account.
Answer:
Necessary Calculation :
Journal entries in the books of Siddhpur Isabgul Limited
Question 18.
Kapoor Media Limited issued 1,20,000 equity shares of ₹ 10 each at a premium of ₹ 80 per share for public subscription. Company called up the amount including share premium in four equal instalments it means on application, on allotment, on first call and on final call. Company received application for 1,60,000 equity shares. Excess applications were rejected and money paid thereon was refunded.
Shahid, who was holding 4000 shares, failed to pay first call and final call on shares held by him. His shares were forfeited after due formalities. These forfeited shares were issued to Ranbir at a premium of ₹ 70 per share and the amount on this was received by the company. Write necessary journal entries in the books of company to record above transactions and also prepare securities premium account.
Answer:
Necessary Calculation:
Journal entries in the books of Kapoor Media Ltd.
Question 19.
Sheetal Electronics Limited issued 1,20,000 equity shares to the public at ₹ 10 per share. Company called up the amount as under: On application ₹ 3 per share, on allotment ₹ 3 per share and on final call ₹ 4 per share.
Applications were received from public for 1,80,000 shares, in this reference allocation was made by company as under: Full allotment was made to applicants of 48,000 shares.
Not a single share was allotted to applicants of 36,000 shares.
72,000 shares were allotted to applicants of 96,000 shares.
All amounts were received in time. From the above information, pass necessary journal entries in the books of the company.
Answer:
Necessary Calculation :
Journal entries in the books of Sheetal Electronics Limited
Question 20.
Gujarat Fertilizers Ltd. of Bharuch issued 4,50,000 shares of 10 per shate. Amount called up on application ₹ 3 per share, on allotment ₹ 3 per share, on first call ₹ 2 per share and on final Call ₹ 2 per share. Applications were received from public of 6,20,000 shares. Allotment of 4,50,000 shares was made pro-rata to 5,40,000 share applicants. Amount paid on applications by remaining applicants were refunded by company.
Mahesh, to whom 1,000 shares were allotted failed to pay the final call, his shares were forfeited and all these shares were reissued at ₹ 5 per share.
Pass journal entries for the above transactions in the books of company.
Answer:
Necessary Calculation :
Journal entries in the books of Gujarat Fertilizers Ltd.
Question 21.
Sharda Limited issued 6,00,000 equity shares at ₹ 10 each, at a premium of ₹ 4 per share. Amount called up per share is as under :
On application ₹ 4, On allotment ₹ 3 + premium, On share first and final call ₹ 3. Subscription were received 3.5 times, out of which 4/7th the share applications were rejected full and pro-rata allotment was made to the remaining applicants. Excess application. money were credited to share allotment and share calls.
Write the necessary journal entries in the books of Sharda Limited.
Answer:
Necessary Calculation :
Journal entries in the books of Sharda Limited
Question 22.
The authorised capital of Shubha Limited of Mumbai is 18,00,000 shares of ₹ 1 each. Company issued 12,00,000 shares at a premium ₹ 580 per share to public. Amount payable on this was as under: On application ₹ 290.50 per share (including premium of ₹ 290), on allotment ₹ 290.50 per share (including premium of ₹ 290) Company received 16,50,000 share application from public, out of this applications of 1,50,000 shares were rejected and on balance share application 12,00,000 shares were allotted.
All called up amount were received in proper time. Company maintains the combined ‘Share Application and Allotment Account’.
Pass journal entries in the books of company for above transactions.
Answer:
Necessary Calculation :
Journal entries in the books of Sharda Limited
Question 23.
Pancho villa Manuf. Limited issued 7,50,000 equity shares at ₹ 10 each, at a premium of 20% for public. Amount called up per share is as under: With application ₹ 5, on allotment ₹ 4 (including premium), on final call ₹ 3. Applications received for 11,25,000 shares. Applications for 75,000 shares were rejected and amount paid on them was refunded. Pro-rata allotment was made for 7,50,000 shares to the remaining applicants and excess application money were adjusted against the amount due on allotment.
A shareholder, Vishal could not pay final call money on his 7,500 allotted shares. Vishal’s shares were forfeited by company and reissued at 10% discount. Pass necessary journal entries in the books of the company for the above transactions, or Write journal entries in the books of the company for following:
(i) For share forfeiture,
(ii) For reissue of shares,
(iii) For close of the share forfeiture account.
Answer:
Necessary Calculation :
Journal entries in the books of Panchvilla Manuf. Limited
Question 24.
Ahmedabad Chemical Limited issue 1,50,000 equity shares of ₹ 100 each at a premium of ₹ 30 per share. Amount payable was as under :
On share application and allotment ₹ 85 per share (including premium) On share first and final call – balance amount.
Applications were received for 2,55,000 shares. Applications for 55,000 shares were rejected and allotment was made pro-rata to the remaining applicants. The excess share application and allotment money was to be credited to share first and final call. Amount was called on calls. Entire called up amount was received in time.
Pass necessary journal entries for recording the above transactions in the books of Ahmedabad Chemical Ltd.
Answer:
Necessary Calculation :
Journal entries in the books of Ahmedabad Chemical Limited
