Question

During the year 2023-24, Nikoy Ltd. registered with an authorised capital of 5,00,000 equity shares of ₹ 10 each. It issued 2,00,000 equity shares, the same year, to which 95% applications were subscribed.

During the year 2024-25, Nikoy Ltd.

1. Purchased Land & Building costing ₹ 5,00,000 from Agro Housing Ltd. Purchase consideration was settled by issuing sufficient number of Equity shares at 25% premium.
2. Issued 10,000 Equity Shares to promoters at par.
3. Invited applications for 20,000 equity shares of ₹ 10 each at 25% premium. Entire money was payable on applications. Applications were received for 16,000 shares. Since it did not fulfil the provisions of the Companies’ Act 2013, regarding minimum subscription, the entire application money was refunded within 15 days.
4. The company incurred ₹ 22,000 as share issue expenses.

You are required to:

1. Pass necessary journal entries for the year 2024-25.
2. Calculate the Subscribed Capital of Nikoy Ltd. as at 31st March, 2025.
3. Prepare the share issue expenses account.

Answer 1

i.

Journal of Nikoy Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Land & Building A/c   ...Dr.		5,00,000	-
	To Agro Housing Ltd.		-	5,00,000
	(Land & Building purchased)
2.	Agro Housing Ltd.   ...Dr.		5,00,000	-
	To Equity Shares Capital A/c		-	4,00,000
	To Securities Premium A/c		-	1,00,000
	(Purchase consideration settled)
3.	Goodwill/Incorporation Cost A/c   ...Dr.		1,00,000	-
	To Promoters A/c		-	1,00,000
	(Incorporation cost is payable to Promoter)
4.	Promoters A/c   ...Dr.		1,00,000	-
	To Equity Share Capital A/c		-	1,00,000
	(Incorporation cost settled to Promoter)
5.	Bank A/c   ...Dr.		2,00,000	-
	To Share Application & Allotment A/c		-	2,00,000
	(Share Application money received)
6.	Share Application & Allotment A/c   ...Dr.		2,00,000	-
	To Bank A/c		-	2,00,000
	(Application money rejected and refunded)
7.	Share issue expenses A/c   ...Dr.		22,000	-
	To Bank A/c		-	22,000
	(being share issue expenses paid)
8.	Securities Premium A/c   ...Dr.		1,00,000	-
	Statement of Profit & Loss   ...Dr.		22,000	-
	To Share issue expenses A/c		-	22,000
	To Incorporation Cost A/c		-	1,00,000
	(being share issue expenses & incorporation cost written off)

ii.

Subscribed Capital of Nikoy Ltd. as at 31st March, 2025

Shares subscribed in 2023-24 = 2,00,000 × 95%

= 1,90,000

Calculation of Shares Issued to Agro Housing Ltd.

Face Value of one share = ₹ 10

Premium per share = 25% of ₹ 10 = ₹ 2.50

Issue Price per share = Face Value + Premium

=  ₹ 10 + ₹ 2.50

= ₹ 12.50

Total Purchase Consideration = ₹ 5,00,000

Number of shares issued = `"Total Consideration"/ "Issue price per share"`

=  `(₹ 5,00,000) /(₹ 12.50)`

= 40,000 shares

Shares issued to Promoters = 10,000

Total Subscribed Capital = 1,90,000 + 40,000 + 10,000

= 2,40,000 shares

Subscribed Capital

Subscribed & fully paid up

2,40,000 Equity Shares of ₹ 10 each = ₹ 24,00,000

iii.

Dr.	Share issue expenses A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c	22,000	By Securities Premium A/c	22,000
	22,000		22,000