NCERT solutions for Accountancy Company Accounts and Analysis of Financial Statements [English] Class 12 chapter 1 - Accounting for Share Capital [Latest edition]

State whether the following statement is True or False.

A company is an artificial person.

State whether the following statement is true.

Shareholders of a company are liable for the acts of the company.

State whether the following statement is true.

Every member of a company is entitled to take part in its management.

State whether the following statement is true.

Company’s shares are generally transferable.

State whether the following statement is true.

Share application account is a personal account.

State whether the following statement is true.

The director of a company must be a shareholder.

State whether the following statement is true.

Paid-up capital can exceed called-up capital.

State whether the following statement is true.

Capital reserves are created from capital profits.

State whether the following statement is true.

At the time of issue of shares, the maximum rate of securities premium is 10%.

State whether the following statement is true.

The part of capital which is called up only on winding up is called reserve capital.

On April 01, 2019, a limited company was incorporated with an authorised capital of Rs. 40,000 divided into shares of Rs. 10 each. It was offered to the public for subscription of 3,000 shares payable as follows:

The shares were fully subscribed for by the public, and application money was duly received on April 15, 2019. The directors made the allotment on May 1, 2015.

How will you record the share capital transactions in the books of a company if the amounts due have been duly received, and the company maintains the combined account for application and allotment?

Harsha Ltd. was registered with an authorised capital of Rs. 25,00,000 divided into 2,50,000 Equity Shares of Rs. 10 each. Promoters of the company had undertaken to subscribe 25,000 Equity Shares of Rs. 10 each once the company was incorporated. The amount was paid by the subscribers and received by the company.

The company later issued at par 2,00,000 shares to the public for subscription. It received applications for 1,80.000 Equity Shares both through ASBA and physical mode. Shares were allotted to all the applicants.

Determine the Authorised Share Capital, Issued Share Capital and Subscribed Share Capital of Harsha Ltd.

A company issued 20,000 equity shares of Rs.10 each, payable Rs.3 on application, Rs.3 on allotment, Rs.2 on the first call, Rs.2 on the second call, and the final call. The allotment money was payable on or before May 01, 2015; first call money on or before August Ist, 2015; and the second and final call on or before October Ist, 2015; ‘X’, whom 1,000 shares were allotted, did not pay the allotment and call money; ‘Y’, an allottee of 600 shares, did not pay the two calls; and ‘Z’, whom 400 shares were allotted, did not pay the final call. Pass journal entries and prepare the balance sheet of the company.

Alfa Company Ltd. issued 10,000 shares of Rs. 10 each for cash, payable Rs. 3 on application, Rs. 2 on allotment, and the balance in two equal instalments. The allotment money was payable on or before March 31, 2015; the first call money on or before 30 June, 2015; and the final call money on or before August, 31. 2015. Mr. ‘A’, to whom 600 shares were allotted, paid the entire remaining face value of shares allotted to him on allotment. Record journal entries in the company’s books and also exhibit the share capital in the balance sheet on the date.

Equity shareholders are ______.

Nominal share capital is ______.

Interest on calls in arrears is charged according to “Table F” at ______.

Money received in advance from shareholders before it is actually called-up by the directors is ______.

Shares can be forfeited ______.

The Profit on reissue of forfeited shares is transferred to ______.

Balance of share forfeiture account is shown in the balance sheet under the item ______.

A company forfeited 100 equity shares of Rs.10 each issued at a premium of 20% for non-payment of the final call of Rs. 5, including the premium. Show the journal entry for forfeiture of shares.

A company forfeited 800 equity shares of Rs. 10 each issued at a discount of 10% for non-payment of the first and final calls of Rs. 2 each. Calculate the amount forfeited by the company and pass the journal entry for forfeiture of the shares.

Excel Company Limited made an issue of 1,00,000 Equity Shares of Rs.10 each, payable as follows:

X, the holder of 400 shares, did not pay the call money and his shares were forfeited. 200 of the forfeited shares were reissued as fully paid at Rs. 8 per share. Draft necessary journal entries and prepare Share Capital and Share Forfeiture accounts in the books of the company.

If a Share of Rs. 10 on which Rs. 8 is called-up and Rs. 6 is paid as forfeited. State with what amount the Share Capital account will be debited.

If a Share of Rs. 10 on which Rs. 6 has been paid is forfeited, at what minimum price can it be reissued?

Ahluwalia Ltd. issued 1,000 equity shares of Rs. 100 each as fully paid-up in consideration of the purchase of plant and machinery worth Rs. 1,00,000. What entry will be recorded in the company’s journal?

Journalise the following:

The directors of a company forfeited 200 equity shares of Rs. 10 each on which Rs. 800 had been paid. The shares were reissued upon payment of Rs. 1,500.

Journalise the following:

A holds 100 shares of Rs. 10 each on which he has paid Re. 1 per share on application. B holds 200 shares of Rs. 10 each on which he has paid Re. 1 on application Rs. 2 on allotment. C holds 300 shares of Rs. 10 each, which have paid Re.1 on applications, Rs. 2 on allotment and Rs. 3 on the first call. They all failed to pay their arrears and the second call of Rs. 4 per share as well. All the shares of A, B and C were forfeited and subsequently reissued at Rs. 11 per share as fully paid up.

What is public company?

What is a private limited company?

When can shares be forfeited?

What is meant by Calls-in-Arrears?

What do you mean by a listed company?

What are the uses of securities premiums?

What is meant by Calls-in-Advance?

Write a brief note on “Minimum Subscription”.

What is meant by the word ‘Company’?

Describe the characteristics of the Company.

Explain in brief the main categories in which the share capital of a company is divided.

What do you mean by the term ‘share’?

Discuss the type of shares which can be issued under the Companies Act, 2013, as amended to date.

Discuss the process for the allotment of shares of a company in case of over subscription.

What are preference shares?

Describe the different types of preference shares.

Describe the provision of law relating to ‘Calls-in-Arrears’.

Describe the provision of law relating to ‘Calls-in-Advance’.

Explain the term ‘Over-subscription’.

How is ‘Over-subscription’ dealt with in accounting records?

Explain the term ‘Under-subscription’.

How is ‘Under-subscription’ dealt with in accounting records?

Describe the purposes for which a company can use a ‘Securities Premium Account’.

State clearly the conditions under which a company can issue shares at a discount.

Explain the term ‘Forfeiture of Shares’.

Give the accounting treatment on the forfeiture of Shares.

Anish Limited issued 30,000 equity shares of Rs 100 each payable at Rs 30 on application, Rs 50 on allotment and Rs 20 on Ist and final call. All money was duly received.

Record these transactions in the journal of the company.

The Adersh Control Device Ltd was registered with the authorised capital of Rs 3,00,000 divided into 30,000 shares of Rs 10 each, which were offered to the public. Amount payable as Rs 3 per share on application, Rs 4 per share on allotment and Rs 3 per share on first and final call. These shares were fully subscribed, and all money was duly received. Prepare the journal and the Cash Book.

Software Solution India Ltd is inviting applications for 20,000 equity shares of Rs 100 each, payable Rs 40 on application, Rs 30 on allotment and Rs 30 on call. The company received applications for 32,000 shares. Applications for 2,000 shares were rejected, and the money was returned to the applicants. Applications for 10,000 shares were accepted in full, and applicants for 20,000 shares were allotted half of the number of shares applied for, and excess application money was adjusted into allotment. All money received is due on allotment and call.

Prepare journal and cash book.

Rupak Ltd. issued 10,000 shares of Rs 100 each, payable Rs 20 per share on application, Rs 30 per share on allotment and the balance in two calls of Rs 25 per share. The application and allotment money were duly received. On the first call, all members pay their dues except one member holding 200 shares, while another member holding 500 shares paid for the balance due in full. Final call was not made. Give journal entries and prepare the cash book.

Mohit Glass Ltd. issued 20,000 shares of Rs 100 each at Rs 110 per share, payable Rs 30 on application, Rs 40 on allotment (including Premium), Rs 20 on first call and Rs 20 on final call. The applications were received for 24,000 shares, allotted 20,000 shares, and rejected 4,000 shares, and the amount returned thereon. The money was duly received.

Give journal entries.

A limited company offered for subscription of 1,00,000 equity shares of Rs 10 each at a premium of Rs 2 per share. 2,00,000. 10% Preference shares of Rs 10 each at par.

The amount on shares was payable as under:

All the shares were fully subscribed, called-up and paid.

Record these transactions in the journal and cash book of the company:

Eastern Company Limited, having an authorised capital of Rs 10,00,000, is divided into equity shares of Rs 10 each, issued 50,000 equity shares at a premium of Rs 3 per share, payable as follows:

Applications were received for 60,000 shares, and the directors allotted the shares as follows:

1. Applicants for 40,000 shares received in full.
2. Applicants for 15,000 shares received an allotment of 8,000 shares.
3. Applicants for 5000 shares received on allotment of 2000 shares, excess money being returned.

All amounts due on allotment were received.

The first call was duly made, and the money was received with the exception of the call due on 100 shares.

Give journal and cash book entries to record these transactions of the company. Also, prepare the Balance Sheet of the company.

Kumar Ltd. purchased assets of Rs. 6,30,000 from Bhanu Oil Ltd. Kumar Ltd. issued equity share of Rs. 100 each fully paid in consideration. What journal entries will be made, if the shares are issued, (a) at par, and (b) at premium of 20%.

Bansal Heavy Machine Ltd purchased a machine worth Rs. 3,80,000 from Handa Trader. Payment was made as Rs. 50,000 cash and the remaining amount by issue of equity shares of the face value of Rs. 100 each fully paid at an issue price of Rs 110 each.

Give journal entries to record the above transaction.

Naman Ltd issued 20,000 shares of Rs 100 each, payable Rs 25 on application, Rs 30 on allotment, Rs 25 on first call and the balance on final call. All money duly received except Anubha, who, holding 200 shares, did not pay allotment and call money, and Kumkum, who, holding 100 shares, did not pay both calls. The directors forfeited shares of Anubha and Kumkum.

Give journal entries.

Kishna Ltd issued 15,000 shares of Rs 100 each at a premium of Rs 10 per share, payable as follows:

All the shares subscribed and the company received all the money due, with the exception of the allotment and call money on 150 shares. These shares were forfeited and reissued to Neha as fully paid shares of Rs 12 each.

Give journal entries in the books of the company.

Arushi Computers Ltd. issued 10,000 equity shares of Rs. 100 each at 10% premium. The net amount payable is as follows:

A shareholder holding 200 shares did not pay the final call. His shares were forfeited. Out of these 150 shares were reissued to Ms. Sonia at Rs. 75 per share.

Give journal entries in the books of the company.

Raunak Cotton Ltd. issued a prospectus inviting applications for 6,000 equity shares of Rs 100 each at a premium of Rs 20 per share, payable as follows:

Applications were received for 10,000 shares, and allotment was made pro rata to the applicants of 8,000 shares, the remaining applications being refused. Money received in excess of the application was adjusted toward the amount due on allotment.

Rohit, to whom 300 shares were allotted, failed to pay the allotment and call money; his shares were forfeited. Itika, who applied for 600 shares, failed to pay the two calls and her shares were also forfeited. All these shares were sold to Kartika for a fully paid price of Rs 80 per share.

Give journal entries in the books of the company.

Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under:

Applications were received for 1,60,000 shares. Allotment was made on a pro-rata basis. Excess money on the application was adjusted against the amount due on allotment.

Rohan, for whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs 7 per share.

Record journal entries in the books of the company to record these transactions relating to share capital. Also, show the company’s balance sheet.

Prince Limited issued a prospectus inviting applications for 20,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share payable as follows:

Applications were received for 30,000 shares, and allotment was made on a pro-rata basis. Money overpaid on applications was adjusted to the amount due on allotment.

Mr. Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr. Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited.

Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for Rs. 9 per share, the whole of Mr. Mohit’s shares being included.

Record journal entries in the books of the Company and prepare the Balance Sheet.

Life Machine Tools Limited, issued 50,000 equity shares of Rs 10 each at Rs 12 per share, payable at to Rs. 5 on application (including premium), Rs 4 on allotment and the balance on the first and final call.

Applications for 70,000 shares had been received. Of the cash received, Rs 40,000 was returned, and Rs 60,000 was applied to the amount due on allotment, the balance of which was paid. All shareholders paid the call due, with the exception of one shareholder of 500 shares. These shares were forfeited and reissued as fully paid at Rs 8 per share. Journalise the transactions.

The Orient Company Limited offered for public subscription 20,000 equity shares of Rs 10 each at a premium of 10% payable at Rs 2 on application; Rs 4 on allotment, including premium; Rs 3 on First Call, and Rs 2 on Second and Final call. Applications for 26,000 shares were received. Applications for 4,000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made, and all the money was received except the final call on 500 shares, which were forfeited. 300 of the forfeited shares were later on issued as fully paid at Rs 9 per share. Give journal entries and prepare the balance sheet.

Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the following terms:

Applications for 5,00,000 shares were received. It was decided:

1. to refuse allotment to the applicants for 20,000 shares;
2. to allot in full to applicants for 80,000 shares;
3. to allot the balance of the available shares pro rata among the other applicants; and
4. to utilise excess application money in part as payment of allotment money.

One applicant, whose shares had been allotted on a pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ Rs 9 per share. Show the journal and prepare the cash book to record the above.

Ashoka Limited Company, which had issued equity shares of Rs. 20 each at a premium of Rs. 4 per share, forfeited 1,000 shares for non-payment of the final call of Rs. 2 per share. 400 of the forfeited shares were reissued at Rs.14 per share out of the remaining shares of 200 shares reissued at Rs.20 per share. Give journal entries for the forfeiture and reissue of shares and show the amount transferred to capital reserve and the balance in the Share Forfeiture Account.

Amit holds 100 shares of Rs. 10 each, on which he has paid Rs. 1 per share as application money. Bimal holds 200 shares of Rs. 10 each on which he has paid Rs. 1 and Rs. 2 per share as application and allotment money, respectively. Chetan holds 300 shares at Rs. 10 each and has paid Rs. 1 on application, Rs. 2 on allotment, and Rs. 3 for the first call. They all failed to pay their arrears, and upon the second call of Rs. 2 per share, the directors therefore forfeited their shares. The shares are subsequently reissued for Rs. 11 per share, fully paid. Journalise the transactions.

Ajanta Company Limited having a normal capital of Rs 3,00,000, divided into shares of Rs 10 each offered for public subscription of 20,000 shares payable at Rs 2 on application; Rs 3 on allotment and the balance in two calls of Rs 2.50 each. Applications were received by the company for 24,000 shares. Applications for 20,000 shares were accepted in full and the shares allotted. Applications for the remaining shares were rejected and the application money was refunded. All moneys due were received with the exception of the final call on 600 shares which were forfeited after legal formalities were fulfilled. 400 shares of the forfeited shares were reissued at Rs 9 per share. Record necessary journal entries and prepare the balance Sheet showing the amount transferred to capital reserve and the balance in Share forfeiture account.

Journalise the following transactions in the books of Bhushan Oil Ltd.:

1. 200 shares of Rs. 100 each issued at a premium of Rs. 10 were forfeited for the non-payment of allotment money of Rs. 60 per share. The first and final call of Rs. 20 per share on these shares were not made. The forfeited shares were reissued at Rs. 70 per share as fully paid-up.
2. 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment were forfeited for non-payment of allotment money of Rs. 8 per share, including premium. The first and final calls of Rs. 4 per share were not made. The forfeited shares were reissued at Rs. 15 per share fully paid-up.
3. 400 shares of Rs. 50 each issued at par were forfeited for non-payment of the final call of Rs. 10 per share. These shares were reissued at Rs. 45 per share fully paid-up.

Amisha Ltd. inviting applications for 40,000 shares of Rs. 100 each at a premium of Rs. 20 per share. Amount payable on application Rs. 40; on allotment Rs. 40 (Including premium); on first call Rs. 25, and on second and final call Rs. 15.

Applications were received for 50,000 shares, and allotment was made on a pro-rata basis. Excess money on the application was adjusted on the sums due on allotment.

Rohit, to whom 600 shares were allotted, failed to pay the allotment money, and his shares were forfeited after allotment. Ashmita, who applied for 1,000 shares, failed to pay the two calls, and his shares were forfeited after the second call. Of the shares forfeited, 1,200 shares were sold to Kapil for Rs 85 per share as fully paid, the whole of Rohit’s shares being included.

Record necessary journal entries.