Q 1Ruby
ltd.issued 30000 equity share of Rs 10 each at a premium of Rs 3 per share
Payable as Rs. 3 on app. Rs. 6 on
allotment including premium’s. 2on first call
And Rs, 2 on second call. Application
received 40000 share.4000 application rejected and
balance were subscribed on pro-rata
basis.Mr A holder of 600 share, failed to pay allotment and
subsequent failure to pay first call, his
share were forfeited..Mr B holder of 400 share failed to
pay two calls. His share were forfeited.
Later on. 800 share(including A all share), were re –
issued To Mr.C, as fully paid at Rs 11 per
share. Pass necessary entries.
ANS Capital reserves 3360, Amount not received
on allotment 3240,
2. Babba Company purchased a machine from Gabba ltd for Rs.400000 at
10% trade
Discount. Half amount paid by
bank and the remaining amount by share of RS.10 each
At 10% discount.
Record above transaction.
ANS a) Dr. Machine a/c & Cr.Baba by 360000
b) Dr.Baba a/c
& Cr.Bank 180000
c) Dr.Baba a/c and
discount on share a/c by 18000, 20000
And Cr.equity share
capital by 200000
3. Pass necessary entries
I Convert 100, 12% deb.of
Rs.100 each into 10% Preference share of Rs.100 each at 25%
Premium.
II Redeemed
Rs.100000, 12% deb. At a premium of 10% by draw a lots.
ANS a) Dr.12% Deb
a/c by 10000 and Cr.10% Pref share & share
premium By 8000 and 2000
b) Dr.12% Deb
and Premium on red. Of deb by 100000 and 10000 & Cr.Bank by 110000
.4 Poonam company Ltd. Issued
10000 equity share at Rs.100 each on 10% Premium.
Amount called as Rs.20 on
application, RS.40 on allotment (including premium), and
Balance on call,
Application was received for
20500 shares. Director rejects 500 shares and allots other
Application on pro-rata
basis. All money received except call on 50 shares which was later on forfeited
.After due notice forfeited share re-issued at Rs 90.Pass necessary entries. 6
ANS Amount Recd on application 410000
Amount Recd on
allotment 200000
Amount Recd on
call 497500
Amount in
capital reserve 2000
5. A. Ltd.
Invited application from public for issue of 2,00,000 equity shares of Rs.10
each, payable on application Rs. 3, on allotment Rs.5 and Rs. 2 on first &
final call. Company received applications for 3, 00,000 shares and decided to
allot the share on pro-rata basis. Excess of application amounts to be utilized
towards allotment and calls. B, who was allotted 2,000 shares failed to pay
allotment and his shares were forfeited after Working :
ANS a. Excess application amount
(3,00,000
-2,00,000)x 3=3,00,000
b. Calls in
arrear:
on allotment
7,000 & 1st call 4,000
Forfeiture amount
3,000x3=9,000
6 Ankit Ltd. Company
purchased a machine worth Rs. 1,05,000 from M/s India
Traders. Payment was made by issue
of equity share of Rs. 10 fully paid at
issue price of Rs. 10.50 each. Pass
journal entries in the books’ of the company.
ANS No. of shares to be issued =
1,05,000/10.50=10,000
Share premium 10,000 x .50 =5,000
a. Machinery a/c -
Dr. 1,05,000
To M/s India Trader
a/c 1,05,000
b. M/s India trader a/c
-Dr. 1,05,000
To Sh.
Cap. a/c
1,00,000
To Sh. Prem. a/c 5,000
7
M/s M.
Ltd. Purchased Machinery for Rs. 3,30,000 from M/s N.Ltd. Payment was
made by issue of 9% debenture of
Rs. 100. Pass journal entries for purchase of
machinery and issue of debenture
when-
a.
Debentures are issued at par
b.
Debentures are issued at premium of 10%
c.
ANS No. of debenture when issued at par
3,300
No.
of debenture when issued at premium 3,000
Machinery a/c -Dr.3,30,000
To M/s N. Ltd. 3,30,000
N. Ltd.
–Dr. 3,30,000
To 9% Debenture a/c 3,30,000
b. N. Ltd.
–Dr. 3,30,000
To 9% Debenture a/c 3,00,000
To Debenture premium a/c 30,000
- Pass
journal entries for issue of debentures in the books of M/s
Gupta Ltd.:-
a.
Issued 10,000, 12% debentures of Rs. 100 each at
discount of 6%
repayable at
premium of 6%.
b.
Issued 15,000 10% debentures of Rs. 100 at
premium of 20%
Repayable at
par.
. Pass journal entries in the books of the company.
ANS a. Bank a/c - Dr 9,40,000
Loss on issue of
deb. –Dr 1,20,000
To 12% Deb. a/c 10,00,000
To Prem. on red. of
deb. a/c 60,000
b. Bank a/c - Dr 18,00,000
To
12% Deb. a/c
15,00,000
.9
Lakshmi Ltd., issued a prospectus inviting applications for 30,000
shares of
Rs.10 each payable as under.
On application Rs.3
On allotment Rs.2
On first call Rs.2
On
final call Rs.3
Applications
were received for 40,000 shares, and pro-rata allotment
was made on
application for 34,000 shares. Excess
money paid on
application
was utilized towards allotment money.
Mr. Rao whom 500
shares were
allotted failed to pay the allotment money and on his
subsequent
failure to pay the first call money, his shares were forfeited
ANS 1. Bank A/c -Dr. 1,20,000
To Share
Application A/c
1,20,000
2. Share application A/c -Dr. 90,000
To Sh. Cap. A/c
90,000
. 3. Share Application a/c 18,000
To Bank a/c
18,000
4. Sh. Allot. A/c -Dr. 60,000
To Sh.Cap.
A/c
60,000
5. Bank
A/C - Dr. 47,000
S.Appl.a/c Dr 12,000
Calls in arrear
A/c - Dr. 1,000
To Sh. Allot A/c 60,000
6. Sh. 1st Call A/c -Dr. 60,000
To Sh. Cap. A/C
60,000
7. Bank A/C - Dr. 59,000
Calls in arrear
A/C - Dr . 1,000
To Sh 1st
call A/C
60,000
8. Sh. Cap. A/c -Dr. 3,500
To Sh.
Forfeiture A/c 1,701
To S.
Allot. A/c
799
To S. first
call a/c 1,000
9. Sh. Final
Call A/c -Dr. 88,500
To Sh. Cap. A/
88,500
10. Bank A/C - Dr. 88,500
To Sh 1st call A/C
88,500
10. Swapna Ltd.,
issued 2,00,000 equity shares of Rs.10 each at a discount
of 10%. On these shares, payments are to be made as
follows.
Rs.3 on
application, Rs.2 on allotment and Rs.5 on first and final call.
Balu who is
allotted 6,000 shares has not paid the first and final call.
Hence his shares
have been forfeited and shave been reissued at a
discount of
5%. Pass necessary journal entries for
forfeiture and re-issue only
in company
books
ANS
1. S. Cap.
a/c Dr. 60,000 (6000X10)
To Share forfeited a/ 24,000
To Discount of issue of shares a/c 6,000
To S. First and final call A/c 30,000
2. Bank a/c Dr. 57,000
Disc.on issue of
shares a/c 3,000
To S.Cap.
a/c
60,000
3. Share forfeited a/c Dr 27,000
To Capital Reserve a/c 27,000
.
11 DIFFERENCE BETWEEN SHARE & DEBENTURE
DEBENTURE SHARE
A debenture holder is
creditor of co. A shareholder is
joint owner of
co.
A debenture
holder gets interest. . A shareholder gets dividend.
A debenture holder gets interest A shareholder gets profit when co.
the co. gets
profit or loss
gets profit. Only.
The rate of interest is fixed for all The rate of dividend change
every
the time
year
Debenture holder had
no voting Shareholder have
voting right.
Right
Debenture may be
converted into Share are never
convertible.
Share.
All debentures are secured in India . Shareholders do not have any
Security
On winding up the debenture On winding up the shareholder
paid
Paid before shareholder after
Debenture
12
A ltd X ltd convert 200 12% debenture of rs. 100 each issued at 10%
discount into convert 1000 12% debentureof Rs. 100 each issued at 5% discount
into equity shareof Rs. 10 each at par
before maturity period.
DISCOUNT A/C DR. 5000
TO
12% DEBENTURE 100000
(2) 12% DEBENTURE A/C DR . 95000
TO EQUITY SHARE. 95000
(BEING 9500 SHARE ISSUED
TO DEBENTURE HODER)
13
Ltd.
forfeited 300 shares of Rs. 10 each fully called up held by Ramesh for
non-payment of allotment money of Rs. 3 per share and final call money of Rs. 4
per share. Out of these 250 shares were
reissued to Rishi for a total payment of Rs.2, 000. Pass necessary journal entries.
Journal
|
Date
|
Particular
|
L.F.
|
Debit
Rs.
|
Credit
Rs.
|
|
|
Shares capital A/c
(300 x Rs. 10)
To share forfeited A/c (300 x 3)
To share allotment A/c (300 x 3)
To share final call A/c (300 x 4)
( Being forfeiture
of 300 share for nonpayment of allotment and final call money)
|
|
3,000
|
900
900
1,200
|
|
|
Bank A/c
Share forfeited A/c
To share capital A/c
( being re issue of 250 forfeited shares for
Rs 8 per share fully paid)
|
|
2,000
500
|
2,500
|
|
|
Share forfeited A/c
To capital reserve A/c
(Being profit on re
issue of 250 shares transferred to capital reserve)
|
|
250
|
250
|
Note:
Total amount forfeited on
300 shares @ Rs. 3 per share = Rs. 900
Amount forfeited on 250
shares re issued @ Rs 3 per share = Rs 750
Less: Discount allowed on reissue of
forfeited shares = 500 Profit on reissue of forfeited shares transfer
to capital reserve = 250
14. How will you show share capital in the
balance sheet?
Ans:
SCHEDULE VI PART I
FORM OF
BALANCE SHEET
(Disclosure of Share capital only)
|
Liabilities
|
Amount
|
|
(1)
Share
Capital
Authorized Capital
|
***
|
|
Issued Capital
|
***
|
|
Subscribed Capital ***
Less: Calls Unpaid ***
Add: Forfeited Shares ***
|
***
|
|
(2)
Reserves
and Surplus
A.
Capital Reserve
B.
capital redemption reserve
C.
Securities Premium
D.
Other reserve
Less:
Debit balance in P&L A/C(if any)
E.
Surplus
F.
Sinking fund
|
|
Example:
A company was formed with an authorized capital of Rs.20,00,000 divided
into 20,000 shares of Rs.100 each. It issued to the public 15,000 shares,
payable as Rs.30 on application, Rs.30 on allotment and the balance on first
and final call. Applications were received for Rs.12,000 shares. The amount of
allotment was duly received except from Mahesh, who held 1,000 shares did not
pay allotment. The company did not make call.
How will you show share capital in the
Balance Sheet?
Solution:
BALANCE SHEET OF A COMPANY
(As On…………..)
|
Liabilities
|
Amount
|
Assets
|
Amount
|
||||
|
Share Capital
Authorized
:
20,000 shares of Rs.100 each
Issued
:
15,000 shares of Rs.100 each
Subscribed:
12,000 shares of Rs.100, each Rs. 60
per shares
call up 7,20,000
Less: 30,000
|
20,00,000
|
Current Assets
Cash at Bank
|
6,90,000
|
||||
|
15,00,000
6,90,000
|
|||||||
|
Total
|
6,90,000
|
Total
|
6,90,000
|
15. Bharath Tyres Ltd. Invited application for
1,00,000 shares of Rs. 10 each issued at a premium of Rs. 4 per share. The amount was payable as under :
On Application Rs. 6 (
including premium Rs. 2)
On Allotment Rs. 6 (
including premium Rs. 2)
Balance on first and final call.
Application for 1,50,000 shares were received. Allotment was made to all applicants on
pro-rata basis.
Subodh, to whom 200 shares were allotted, failed to pay allotment
money. Vikram, to whom 100 shares were
allotted, failed to pay the call money.
Their shares were forfeited and afterwards reissued @ Rs. 8 per share
fully paid up.
Pass necessary Journal entries.
Solution :
Journal
|
Date
|
Particulars
|
L.F.
|
Debit
|
Credit
|
|
I
|
Bank A/c
Share
Application A/c
(Being application received for 1,50,000 shares of
Rs. 6 including premium Rs. 6)
|
|
9,00,000
|
9,00,000
|
|
II
|
Share Application A/c
To Share
Capital A/c
To
Securities Premium A/c
To Share
Allotment A/c
(Being adjustment of share application money)
|
|
9,00,000
|
4,00,000
2,00,000
3,00,000
|
|
III
|
Share Allotment A/c
To Share
Capital A/c
To
Securities Premium A/c
(Being allotment money due on 1,00,000 shares)
|
|
6,00,000
|
4,00,000
2,00,000
|
|
IV
|
Bank A/c
To Share
Allotment A/c
(Being allotment money received on 99,800)
|
|
2,99,400
|
2,99,400
|
|
V
|
Share First and Final call A/c
To Share
Capital A/c
(Being the first and final call money due on
1,00,000 shares)
|
|
2,00,000
|
2,00,000
|
|
VI
|
Bank A/c
To Share
First and Final call A/c
(Being first and final call money received on 99,700
share of Rs. 2 per share)
|
|
1,99,400
|
1,99,400
|
|
VII
|
Share Capital A/c
Securities Premium A/c
To
Share Forfeiture A/c
To
Share Allotment A/c
To
Share First and Final Call A/c
(Being 200 share forfeited for non-payment of
allotment and first call)
|
|
2,000
400
|
1,400
600
400
|
|
VIII
|
Share Capital A/c
To Share
Forfeited A/c
To Share
First and Final Call A/c
(Being 100 share forfeited for the non-payment of
call money)
|
|
1,000
|
800
200
|
|
IX
|
Bank A/c
Share Forfeited A/c
To Share Capital A/c
(Being the re-issue of 300 shares @
Rs. 8 per share, fully paid)
|
|
2,400
600
|
3,000
|
|
X
|
Forfeited Share A/c
To Capita
Reserve A/c
(Being the transfer of profit on re-issue of shares
to capital reserve A/c)
|
|
1,600
|
1,600
|
16. K ltd has been registered with an authorized
capital of Rs. 2,00,000 divided
into 2,000 shares of Rs. 100 each of which 1,000 shares were offered for public
subscription at a premium of Rs. 5 per share payable as under :
Rs.
On Application 10
On Allotment 25
( including premium)
On First Call
40
On Final Call 30
Application were received for 1,800 shares of which applications for 300
shares were rejected outright, the rest of the applications were allotted 1,000
shares on pro-rata basis. Excess
application money was transferred to allotment.
All the money were duly received except from Sunder, holder of 100
shares, who failed to pay allotment and first call money. His shares were later on forfeited, and
reissued to Shyam at Rs. 60 per share, Rs. 70 paid up final call has not been made.
Pass necessary journal entries in the
books of K ltd.
Solution :
Journal
|
Date
|
Particulars
|
L.F.
|
Debit
|
Credit
|
|
I
|
Bank A/c
To Share
Application A/c
(Being application money on 1,800 shares @ Rs. 10
each received)
|
|
18,000
|
18,000
|
|
II
|
Share Application A/c
To Share
Capital A/c
To Bank
A/c
To Share
Allotment A/c
(Being share application money transferred to share capital A/c on
1,000 shares @ 10 each on the pro-rata basis)
|
|
18,000
|
10,000
3,000
5,000
|
|
III
|
Share Allotment A/c
To Share
Capital A/c
To
Securities Premium A/c
(Being share allotment made due with premium)
|
|
25,000
|
20,000
5,000
|
|
IV
|
Bank A/c
To Share
Allotment A/c
(Being share allotment money received with exception
of Rs. 2,000)
|
|
18,000
|
18,000
|
|
V
|
Share First Call A/c
To Share
Capital A/c
(Being share first call money made due)
|
|
40,000
|
40,000
|
|
VI
|
Bank A/c
Calls-in-Arrears A/c
To Share
First Call A/c
(Being share first call money received)
|
|
36,000
4,000
|
40,000
|
|
VII
|
Share Capital A/c (70 × 100)
Securities Premium A/c (5 × 100)
To Share
Forfeited A/c
To Share
Call-in-Arrears
(Being 100 share forfeited for the non-payment of
allotment and share first call)
|
|
7,000
500
|
1,500
6,000
|
|
VIII
|
Bank A/c
Share Forfeited A/c
To Share Capital
A/c
(Being reissue of forfeited shares @ Rs. 60 per
share, Rs. 70 Paid up)
|
|
6,000
1,000
|
7,000
|
|
IX
|
Share Forfeited A/c
To Capital
Reserve A/c
(Being transfer of share forfeited A/c to capital
reserve A/c)
|
|
500
|
500
|
Working
Note :
(i) Calculation
of amount received on allotment :
Total
amount due on allotment (1,000 × 25) 25,000
Less:
Allotment money received in advance (5,000)
Less:
Amount of allotment not received from Sunder (2,000)
Amount received
on allotment 18,000
(ii) Shares
Applied by Sunder = 1,500/1,000 × 100 =
150
(iii) Money paid by Sunder on application (150 ×
10) 1,500
Money
utilized as application money (100 × 10) 1,000
Surplus
money transferred to allotment 500
(iv) Allotment money due from Sunder (100 × 25) 2,500
Less :
Allotment money received in advance from
Sunder
500
Amount of
allotment not received form Sunder
2,000
(iv) While
forfeiting shares, Share Capital Account will be debited @ Rs. 70 per share
because the final call has been made.
17
.X Ltd. Issued 2,00,000 10%
debentures of Rs 100 each at par to be redeemed at par after 12 years.
Debentures are callable after four years at an exercise price of Rs 104. After six years company invoked the call
option and holders of 10.000 debentures responded to the call option. Record necessary entries at the time of issue
of debentures and at the time of cancellation of debentures.
Journal
|
Date
|
Particular
|
l.f
|
Debit
Rs
|
Credit
Rs
|
|
|
On issue of
debentures
Bank A/c
To 10% Debentures application A/c
(money received on application)
|
|
2,00,00,000
2,00,00,000
10,00,000
40,000
40,000
|
2,00,00,000
2,00,00,000
10,40,000
40,000
|
|
10% Debenture application A/c
To 10%
debenture A/c
( debenture application money transferred to 10%
debentures account on allotment)
|
||||
|
At the time
of cancellation of debentures
10% debentures A/c
Loss on redemption
A/c
To Bank
A/c
(debenture redeemed under transferred call option at
Rs. 104)
|
||||
|
Profit & Loss A/c
To Loss
on Redemption A/c
(Loss on redemption of debentures transferred to profit and Loss A/c) |
18 X Ltd., issued 2, 00,000 10% Debentures of
Rs.100 each at par to be redeemed at par after12 years. Debentures are callable
after four years at an exercise price of Rs.104. After six years company
invoked the call option and holders of 10,000debentures responded to the call
option. Record necessary entries at the time of issue of debentures and at the time
of cancellation of debentures.
Solution:
|
Date
|
Particular
|
l.f
|
Debit
Rs
|
Credit
Rs
|
|
|
On issue of
debentures
Bank A/c
To 10%
Debentures application A/c
(money received on application)
|
|
2,00,00,000
2,00,00,000
10,00,000
40,000
40,000
|
2,00,00,000
2,00,00,000
10,40,000
40,000
|
|
10% Debenture application A/c
To 10%
debenture A/c
( debenture application money transferred to 10%
debentures account on allotment)
|
||||
|
At the time
of cancellation of debentures
10% debentures A/c
Loss on redemption
A/c
To Bank
A/c
(debenture redeemed under transferred call option at
Rs. 104)
|
||||
|
Profit & Loss A/c
To Loss
on Redemption A/c
(Loss on redemption of debentures transferred to profit and Loss A/c) |
19 . Pass journal entries in the
books of a limited company in
connection with the issue and
redemption of debentures with reference
to the following transactions:
1.
10% Debentures of Rs 5, 00,000 issued at par
and redeemable at par.
2.
10% Debentures of Rs 5, 00,000 issued at a
premium of 5% but redeemable at par.
3.
10% Debentures of Rs 5, 00,000 issued at a
discount of 5 per cent but redeemable at par.
4.
10% Debentures of Rs 5, 00,000 issued at par
but redeemable at a premium of 5 percent.
5.
10% Debentures of Rs 5, 00,000 issued a
discount of 5% and redeemable at 5 per cent premium.
|
Date
|
Particular
|
l.f
|
Debit
Rs
|
Credit
Rs
|
|
1.
|
(a) On issue
(i) Bank A/c
To 10% Debentures Application &
allotment A/c
(Amount
received on issue)
|
|
5,00,000
|
5,00,000
|
|
|
(ii)10% Debentures Application &
allotment A/c
To 10% debentures A/c
(Allotment of debentures)
|
|
5,00,000
|
5,00,000
|
|
|
(b) On redemption
(i) 10% Debentures A/c
To debentures holders A/c
(amount due to debenture
holders on redemption)
|
|
5,00,000
|
5,00,000
|
|
|
(ii) Debentures A/c
To bank A/c
(Final payment made to
debenture holders)
|
|
5,00,000
|
5,00,000
|
|
2.
|
(a) On issue
(i) Bank A/c
To 10% Debentures Application A/c
(amount received on issue)
|
|
5,25,000
|
5,25,000
|
|
|
(ii)10 % Debenture Application &
allotment A/c
To 10% debenture A/c
To Debe3nture holders A/c
(allotment on debentures and
premium in issue brought into account)
|
|
5,25,000
|
5,00,000
25,000
|
|
|
(b) On redemption
(i) 10% Debentures A/c
To debentures holders A/c
(amount due to debenture
holders on redemption)
|
|
5,00,000
|
5,00,000
|
|
|
(ii) Debenture holders A/c
To Bank A/c
(final payment made to
debentures holders)
|
|
5,25,000
|
5,25,000
|
|
3.
|
(a) On issue
(i) Bank A/c
To 10% debentures Application &
allotment A/c
(Amount received on issue)
|
|
4,75,000
|
4,75,000
|
|
|
(ii) 10% Debentures application &
Allotment A/c
Discount on issue of debentures A/c
To 10% Debenture A/c
(allotment of debentures and
discount on issue brought into account )
|
|
4,75,000
25,000
|
5,00,000
|
|
|
(b) On redemption
(i) 10% Debentures A/c
To debenture holders A/c
(amount due to debentures
holders on redemption )
|
|
5,00,000
|
5,00,000
|
|
|
(ii) debenture holders A/c
To bank A/c
(final payment made to
debenture holders)
|
|
5,00,000
|
5,00,000
|
|
4.
|
(a) On issue
(i) Bank A/c
To 10% debentures Application
& allotment A/c
(Amount received on issue)
|
|
5,00,000
|
5,00,000
|
|
|
(ii) 10% debentures Application &
allotment A/c
Loss on issue of debentures A/c
To 10% debentures A/c
To premium of redemption of
debentures A/c
(allotment of debentures and
premium on redemption brought into account)
|
|
5,00,000
25,000
|
5,00,000
25,000
|
|
|
(b)On redemption
(i) 10% debentures A/c
premium on redemption of debenture
A/c
To debenture holders A/c
(amount due to debenture
holders on redemption including premium )
|
|
5,00,000
25,000
5,25,000
|
|
|
|
(ii) Debenture holders A/c
To bank A/c
(final payment made to
debentures)
|
|
5,25,000
|
5,25,000
|
|
5.
|
(a) On issue
(i) Bank A/c
To 10%bentures application &
allotment A/c
(amount received in issue)
|
|
4,75,000
|
4,75,000
|
|
|
(ii) 10% debentures Application &
allotment A/c
Loss on issue of debentures A/c
To 10 debenture A/c
To premium or redemption of debenture
A/c
(allotment of debentures and
discount on issue and premium on redemption brought into account as loss on issue)
|
|
4,75,000
50,000
|
5,00,000
25,000
|
|
|
(b) On redemption
(i) 10% debentures A/c
Premium on redemption of debenture A/c
To debenture holders A/c
(amount due to debenture holders on redemption including premium)
|
|
5,00,000
25,000
|
5,25,000
|
|
|
(ii) Debentureholders A/c
To bank A/c
(final payment made to
debenture holders)
|
|
5,25,000
|
5,25,000
|
*************************************************************
