Ncert Solutions for Class 12 Accountancy part 2 Chapter 1 Accounting for Share Capital

Class 12 accountancy part 2 Book chapter 1 exercise solutions: Accountancy Class 12 part 2 Book Chapter 1 questions and answers

Textbook	NCERT
Class	Class 12
Subject	Accountancy
Chapter	part 2 Chapter 1
Chapter Name	Accounting for share capital class 12 solutions
Category	Ncert Solutions
Medium	English

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Short Answer Questions

Question 1: What is public company?

Answer 1: A public company is a type of business organization whose shares are traded on a stock exchange or offered to the general public through an initial public offering (IPO). This structure allows the company to raise capital by selling ownership stakes (shares) to investors.

Public companies are typically subject to strict regulatory requirements, including transparency in financial reporting, regular disclosure of business activities, and adherence to corporate governance standards.

Shareholders of a public company have a claim to a portion of the company’s profits through dividends and can influence company decisions through voting rights. Examples of public companies include large corporations like Apple, Microsoft, and Tesla.

Question 2: What is a private company.

Answer 2: A private company is a type of business organization that is privately owned and does not offer its shares to the general public on a stock exchange. Instead, ownership is typically limited to a small group of investors, such as family members, close friends, or private equity firms.

Private companies are not required to disclose their financial information publicly, which allows for greater operational privacy and flexibility. They are governed by fewer regulatory requirements compared to public companies. Common examples of private companies include startups, family businesses, and subsidiaries of larger corporations.

Question 3: When can shares be Forfeited?

Answer 3: A shareholder has to pay allotment money for holding the shares and has to pay the calls, which are part of the share allotment. When a shareholder fails to do so, a 14 days’ notice is served to the shareholder. If the shareholder does not pay in these 14 days, the shares will be forfeited.

Question 4: What is meant by Calls in Arrears?

Answer 4: Calls in Arrears occur when the shareholders fail to pay the amount of the sum of the allotment and the call money and it thus becomes due. Any company that issues shares may decide to consider the payment of the amount against the full price or else may decide to consider it based on the allotment and the call money.

The shareholders in the latter cases have to pay the amount of the sum in exchange for the allotment made to them. In the cases when the shareholders fail to pay the amount of the sum as and when it becomes due, the amount is considered to be the calls in arrears.

Question 5: What do you mean by a listed company?

Answer 5: Listed companies are those companies whose shares are listed on a recognised stock exchange for public trading. When a company’s security is listed in a recognised stock exchange the price fluctuation can easily be observed by the investor and he/she can easily determine the increase/decrease in value of their investment in a concerned listed company.

This is the only reason that the volume remain high in case of a listed company as all the moves can be observed and investment strategy can easily be planned in that company.

Question 6: What are the uses of securities premium?

Answer 6: As per the Section 78 of the Companies Act of 1956, the amount of securities premium can be used by the company for the following activities:

1. For paying up un issued shares of the company to be issued to members (shareholders) of the company as fully paid bonus share,

2. For writing off the preliminary expenses of the company,

3. For writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company,

4. For paying up the premium that is to be payable on redemption of preference shares or debentures of the company.

5. Further, as per the Section 77A, the securities premium amount can also be utilised by the company to Buy-back its own shares.

Question 7: What is meant by Calls in Advance?

Answer 7: When the shareholder pays the whole amount before the share payment date becomes due, i.e., before the share issuing company makes a call for it. It is known as Calls-in-advance.

Question 8: Write a brief note on “Minimum Subscription”.

Answer 8: The ‘Minimum Subscription’ refers to the minimum amount of issue that must be subscribed to on the date of the closure by the public. The Security Exchange Board of India guidelines suggest that the minimum subscription of the share must be 90% of the size of the issue.

In the case when the public fails to achieve the amount of minimum subscription then the shares by the company cannot be issued and they have to repay the money called on the application.

Long Answer Questions

Question 1: What is meant by the word ‘Company’? Describe its characteristics.

Answer 1: A company is a legal entity formed by a group of individuals to carry out business activities, typically with the aim of earning profits. It is registered under the law and possesses a distinct legal identity, separate from its owners. A company can enter into contracts, own assets, sue or be sued, and is governed by legal frameworks like the Companies Act in many countries.

Characteristics of a Company:

1. Separate Legal Entity: A company is distinct from its owners, meaning it can own property, incur liabilities, and conduct business in its own name.
2. Limited Liability: The liability of the shareholders is generally limited to the amount they have invested in the company.
3. Perpetual Succession: A company continues to exist regardless of changes in ownership or management, such as the death, insolvency, or resignation of its members.
4. Common Seal: A company often uses a common seal as its official signature for legal documents, though this practice has been simplified or replaced in some jurisdictions.
5. Transferability of Shares: In public companies, shares can be freely transferred, allowing investors to buy and sell ownership stakes easily. In private companies, this transfer is often restricted.
6. Artificial Person: A company is created by law and does not have a physical presence, but it has rights and responsibilities similar to a natural person.
7. Centralized Management: The company’s activities are managed by a board of directors or managers elected by the shareholders.
8. Regulation and Compliance: Companies must adhere to various legal and regulatory requirements, including maintaining records, filing reports, and complying with tax laws.

These characteristics make a company a distinct and versatile form of business organization.

Question 2: Explain in brief the main categories in which the share capital of a company is divided.

Answer 2: Share capital of a company can be divided into the following categories:

1. Authorised Capital: This is the maximum amount a company can raise by issuing shares. It is the amount mentioned during the formation of the Memorandum of Association.

2. Issued Capital: A portion of authorised share capital that is offered by the company to the general public for subscription.

3. Unissued Capital: A part of authorised capital that is not yet offered to the general public for subscription but can be offered in near future.

4. Subscribed Capital: A part of issued capital which is subscribed by the general public.

5. Unsubscribed Capital: Referred to as that part of issued capital that has not been subscribed by the people (public).

6. Called up Capital: It is a portion of the subscribed capital for which the shareholders are called to pay

7. Uncalled up capital: It is that part of a subscribed capital that is not yet called up, but can be called up as per requirement.

8. Paid Up Capital: It is part of called up share capital that is received by the shareholders

9. Reserve Capital: A company may call up certain part of uncalled share capital when a company is winding up. This cannot be used for any other purpose other than paying back creditors, hence it is called reserve capital.

Question 3: 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.

Answer 3: The total capital of a company is divided into equal units of small denomination termed as shares. The ownership of these shares is easily transferable, from one person to other, subject to certain conditions. The person who is contributing in the capital in the form of shares is known as shareholder. The ownership of a shareholder is limited to the value of the shares held by him/her.

Types of Shares

As per the Section 44 of the Company Act of 2013, there are two types of shares- Preference Shares and Equity Shares (also known as Ordinary Shares)

i) Preference Shares: Section 43 of the Company Act,2013 defines Preference Shares to be featured by the following rights:

a. Preference Shares entitle its holder the right to receive dividend at a fixed rate or fixed amount.

b. Preference Shares entitle its holder the preferential right to receive repayment of capital invested by them before their equity counterparts at the time of winding up of the company.

ii) Equity Shares: Equity Shareholders have a voting right and control the affairs of a company.

As per Section 43 of Companies Act 2013; equity share is a share that is not a preference share. It does not possess any preferential right of payment of dividend or repayment of capital. The rate of dividend is not fixed on equity shares and varies from year to year, depending upon the amount of profit available for distribution after paying dividend to the preference shareholders.

Question 4: Discuss the process for the allotment of shares of a company in case of over subscription.

Answer 4: The oversubscription is referred to as the situation in which the company receives the excess of the application that is called by the company. In the case of the allotment of the shares, the allotments can be made in three cases:

i) In the case when the amount received in excess of the application is returned back to the applicants after they are refused.

• Share Application A/cDr.
• To Share Capital A/c
• To Bank A/c (Excess application money returned)

ii) In the case when the company allots the shares on a pro-rata basis to all the applicants of shares. The excess of the amount which is received on the application of the shares is adjusted during the allotment.

• Share Application A/cDr.
• To Share Capital A/c
• To Share Allotment A/c
• (Adjustment of application money on allotment)

iii) In the case when the companies follow the combination of both the refund of the money and the adjustment through a pro-rata basis on the excess of the amount received. 

• Share Application A/cDr. 
• To Share Capital A/c 
• To Share Allotment A/c 

To Bank A/c (Application money transferred to Share Capital Account and the balance amount is transferred to Share Allotment Account and the excess application money is refunded) 

Question 5: What is a ‘Preference Share’? Describe the different types of preference shares.

Answer 5: Preference Share: Section 43 of the Companies Act, 2013 defines preference shares as shares which entitle the holder to receive dividends and also the right to receive capital invested in order of preference before equity shareholders when the company winds up.

The different types are:

1. Cumulative Preference Share: When arrears of a dividend are cumulative, and such arrears are paid before paying any dividend to equity shareholders, such shares are known as cumulative shares.

2. Non-Cumulative Preference Share: Shares where the dividend is paid from the net profits earned each year, are known as non-cumulative preference shares. If the company does not earn profits in any of the years, the arrears of dividends cannot be claimed.

3. Participating preference share: In these types of shares, the preference shareholder has the luxury of participating in the surplus profit (i.e. apart from the fixed rate of dividend), which is remaining after paying equity shareholders.

4. Non-participating Preference Share: The condition in which the shareholder is entitled only to a fixed dividend pay-out and no share in surplus profits is known as a non-participating preference share.

5. Convertible Preference Share: A type of share which can be converted to equity shares within a period of time.

6. Non-Convertible Preference Share: Type of shares which do not have the right to convert into equity shares.

7. Redeemable Preference Shares: Those shares that can be repaid to the shareholders after a certain period as per provisions mentioned in the Companies Act, 1956

8. Guaranteed Preference Shares: These shares have the provision of getting fixed dividend, even if the company is making no profits

Question 6: Describe the provisions of law relating to ‘Calls in Arrears’ and ‘Calls in Advance’.

Answer 6: Calls-in-Arrears: When a shareholder fails to pay the amount due on allotment or any subsequent calls, then it is termed as Calls-in-Arrears. The Company is authorised by its Article of Association to charge interest at a specified rate on the amount of Call in Arrears from the due date till the date of payment.

If the Article of Association is silent in this regard, then Table A shall be applicable that is interest at 5% p.a. is charged from the shareholders. As per the Revised Schedule VI of the Companies Act, Calls-in-Arrears are deducted from the Called-up Share Capital in the Notes to Accounts (that is prepared outside the Balance Sheet) under the head ‘Share Capital’.

The final amount of Share Capital is shown on the Equity and Liabilities side of the Company’s Balance Sheet. The company can also forfeit the shares on account of non-payment of the calls money after giving proper notice to the shareholders.

Example- X Ltd. issued 12,000 shares of Rs 10 each. All the shares were duly subscribed, however, the first and final call of Rs 4 on 5,000 shares remained unpaid.

                                        X Ltd.

                                   Balance Sheet

Particulars	Note No.	Amount (rs)
I. Equity and LiablitiesShareholders Funds Shrare Capital        2. Non-Current Liablities       3. Current Liablities	1	1,00,000        –         –
Total
II. AssetsNon-current AssetsCurrent Assets		—
Total

Question 7: Explain the terms ‘Over subscription’ and ‘Under subscription’. How are they dealt with in accounting records?

Answer 7: Over Subscription and Under Subscription

1. Over Subscription: This occurs when a company receives more applications for its shares than the number of shares it has issued. For example, if a company issues 10,000 shares but receives applications for 15,000 shares, it is an over-subscription.

How It Is Dealt With in Accounting:

• Excess Refund: The company refunds the excess amount received from applicants who were not allotted shares.
• Pro-rata Allotment: In some cases, shares may be allotted on a proportionate basis, and excess application money is either refunded or adjusted against the amount payable on allotment.

Journal Entries for Over Subscription:

1. Application money received:

Bank A/C Dr.
To Share Application A/C

2. Transfer of application money to share capital (only for allotted shares):

Share Application A/C Dr.
To Share Capital A/C
To Share Allotment A/C (if excess money is adjusted)

3. Refund of excess application money:

Share Application A/C Dr.
To Bank A/C

2. Under Subscription: This occurs when a company receives fewer applications for its shares than the number of shares issued. For example, if a company issues 10,000 shares but receives applications for only 8,000 shares, it is an under-subscription.

How It Is Dealt With in Accounting:

• As per legal requirements, a company must receive a minimum subscription (usually a percentage of the issued amount). If this threshold is not met, the company cannot proceed with the allotment, and the application money must be refunded.
• If the minimum subscription is met, the company proceeds with allotment for the shares applied.

Journal Entries for Under Subscription:

1. Application money received:

Bank A/C Dr.
To Share Application A/C

2. Transfer of application money to share capital (for the shares subscribed):

Share Application A/C Dr.
To Share Capital A/C
To Share Allotment A/C

3. Refund of application money (if applicable):

Share Application A/C Dr.
To Bank A/C

By managing over- and under-subscription effectively, companies ensure compliance with legal requirements and maintain accurate accounting records.

Question 8: Describe the purposes for which a company can use the amount of Securities Premium.

Answer 8: The purposes for which the company may use the amount of the securities premium wholly or in part are as follows:

• It orders to issue the fully paid bonus shares of the company.
• It orders to write off the preliminary expenses of the company.
• It orders to write off the expenses such as discount allowed, and commission paid on the issue of any shares or debentures.
• it orders to purchase its own shares this is also termed as Buy Back.
• It orders to provide the premiums payable upon the redemption of the preference shares or debentures.

Question 9: State clearly the conditions under which a company can issue shares at a discount.

Answer 9: Under the following conditions, a company can issue shares at a discount:

• 1. The shares issued must belong to a class of shares that are already issued.
• 2. Shares can be issued at a discount after a minimum time frame of 1 year from the date business has started
• 3. The issue of shares at a discount is authorised by a resolution that is passed by the company in a general meeting and approved by the Company law board.
• 4. Shares can be issued at a discount within two months of obtaining sanction company law board.
• 5. Maximum rate of discount must not cross 10% of the face value or as decided by the company law board.

Question 10: Explain the term ‘Forfeiture of Shares’ and give the accounting treatment on forfeiture.

Answer 10: Forfeiture of shares refers to the process by which a company cancels the shares of a shareholder who has failed to pay the allotment money or any subsequent calls (such as first or final call) within the stipulated time. When shares are forfeited, the shareholder loses ownership rights and any money already paid on those shares.

Accounting Treatment of Forfeiture of Shares: When shares are forfeited, the following entries are made in the accounting records:

1. Recording Forfeiture of Shares:

• The amount received on the forfeited shares is transferred to a separate account called the Share Forfeiture Account.
• The unpaid amount is canceled by debiting the Share Capital Account.

Journal Entry:

Share Capital A/C      Dr. (For the nominal value of shares forfeited)  
   To Share Forfeiture A/C    (For the amount already paid by the shareholder)  
   To Calls in Arrears A/C    (For the unpaid amount)  

2. Reissue of Forfeited Shares:

• The company can reissue the forfeited shares at a price equal to or below their nominal value.
• Any surplus from the reissue (i.e., the amount already paid by the previous shareholder plus the reissue price) is treated as capital profit.

Journal Entry for Reissue:

Bank A/C                     Dr. (Amount received on reissue)  
Share Forfeiture A/C         Dr. (Balance of forfeiture used to cover discount, if any)  
   To Share Capital A/C          (Nominal value of shares reissued)  

3. Transfer of Balance in Share Forfeiture Account:

• If the forfeited shares are reissued, any remaining balance in the Share Forfeiture Account is transferred to the Capital Reserve Account as it represents a capital profit.

Journal Entry:

Share Forfeiture A/C       Dr.  
   To Capital Reserve A/C  

Example

Suppose a shareholder holding 100 shares of ₹10 each has paid only ₹5 per share (₹3 on application and ₹2 on allotment). The company forfeits the shares for non-payment of the first call of ₹3 and final call of ₹2.

1. Forfeiture of Shares:

Share Capital A/C      Dr. ₹1,000 (100 × ₹10)  
   To Share Forfeiture A/C    ₹500 (100 × ₹5 paid)  
   To Calls in Arrears A/C    ₹500 (100 × ₹5 unpaid)  

2. Reissue of Forfeited Shares at ₹8 per share:

Bank A/C               Dr. ₹800 (100 × ₹8)  
Share Forfeiture A/C   Dr. ₹200 (100 × ₹2 discount)  
   To Share Capital A/C     ₹1,000 (100 × ₹10)  

3. Transfer to Capital Reserve:

Share Forfeiture A/C   Dr. ₹300 (remaining balance)  
   To Capital Reserve A/C    ₹300  

Numerical Questions

Question 1: 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.

Answer 1:

Books of Anish Limited
Date	Particulars				L.F.	DebitAmount₹	CreditAmount ₹
	Bank A/c			Dr.		9,00,000
		To Equity Share Application A/c					9,00,000
	(Application money received on application for 30,000 equity shares @ ₹ 30 per share)
	Equity Share Application A/c			Dr.		9,00,000
		To Equity Share Capital A/c					9,00,000
	(Share Application money transferred to Share CapitalAccount)
	Equity Share Allotment A/c			Dr.		15,00,000
		To Equity Share Capital A/c					15,00,000
	(Allotment money due on 30,000 @ ₹ 50 per share)
	Bank A/c			Dr.		15,00,000
		To Equity Share Allotment A/c					15,00,000
	(Share Allotment money received for   30,000 shares @₹ 50 per share)
	Equity Share First and Final Call A/c			Dr.		6,00,000
		To Equity Share Capital A/c					6,00,000
	Share First and Final call due on 30,000 shares @ ₹ 20per share)
	Bank A/c			Dr.		6,00,000
		To Equity Share First and Final Call A/c					6,00,000
	(Share First and Final Call money received for 30,000shares @ ₹20 per share)

Question 2: The Adarsh 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 dully received. Prepare journal and Cash Book.

Answer 2:

Books of Adersh Control Device Ltd Journal
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Equity Share Application A/c		Dr.		90,000
		To Equity Share Capital A/c				90,000
	(Share Application money for 30,000 shares @ ₹ 3 per sharetransferred to Share Capital Account)
	Equity Share Allotment A/c		Dr.		1,20,000
		To Equity Share Capital A/c				1,20,000
	(Share Allotment money due on 30,000 @ ₹ 4 per share)
	Equity Share First and Final Call A/c		Dr.		90,000
		To Equity Share Capital A/c				90,000
	(Share First and Final Call due on 30,000 @ ₹ 3 per share)

Cash Book (Bank Column)
Dr.				Cr.
Date	Particulars	J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Equity Share Application		90,000
	Equity Share Allotment		1,20,000
	Equity Share First and Final Call		90,000		By Balance c/d		3,00,000
			3,00,000				3,00,000

Question 3: Software Solution India Ltd. invited applications for 20,000 equity shares of Rs.100 each, payable Rs.40 on application, Rs.30 on allotment and Rs.30 on first and final call. The company received applications for 32,000 shares. Application for 2,000 shares were rejected and money returned to applicants. Applications for 10,000 shares were accepted in full and applicants for 20,000 shares allotted half of the number of shares applied and excess application money adjusted into allotment. All money due on allotment and call was received.
Prepare journal and cash book.

Answer 3:

Books of Software Solution India Ltd.Journal
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Equity Share Application A/c		Dr.		12,00,000
		To Equity Share Capital A/c				8,00,000
		To Equity Share Allotment A/c				4,00,000
	(Application money transferred to Equity Share Capital for 20,000 shares @ ₹ 40 and ₹ 4,00,000 is adjusted towards allotment)
	Equity Share Allotment A/c		Dr.		6,00,000
		To Equity Share Capital A/c				6,00,000
	(Equity Share Allotment money due on 20,000 @ ₹ 30per share)
	Equity Share First and Final call A/c		Dr.		6,00,000
		To Equity Share Capital A/c				6,00,000
	(Equity share on First and Final call due on 20,000 @₹ 30 per share)

Cash Book (Bank Column)
Dr.				Cr.
Date	Particulars	J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Equity Share Application		12,80,000		Equity Share Application		80,000
	Equity Share Allotment		2,00,000		Balance c/d		20,00,000
	Equity Share First and Final Call		6,00,000
			20,80,000				20,80,000

Working Note:

Amount due on Allotment for 20,000 shares @ ₹ 30 per share	6,00,000
Money adjusted on application 10,000 shares @ ₹ 40 each	4,00,000
Money to be received on Allotment	2,00,000

Question 4: Rupak Ltd. issued 10,000 shares of Rs.100 each payable Rs.20 per share on application, Rs.30 per share on allotment and balance in two calls of Rs.25 per share. The application and allotment money were duly received. On first call, all members paid 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 cash book.

Answer 4:

Books of Rupak Ltd. Journal
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Share Application A/c		Dr.		2,00,000
		To  Share Capital A/c				2,00,000
	(Application money for 10,000 shares transferred to Share CapitalAccount)
	Share Allotment A/c		Dr.		3,00,000
		To Share Capital A/c				3,00,000
	(Allotment money due on 10,000 shares @ ₹ 30 per share)
	Share First Call A/c		Dr.		2,50,000
		To Share Capital A/c				2,50,000
	(Share First Call due on 10,000 shares @ ₹ 25 per share)
	Calls in Arrears A/c		Dr.		5,000
		To Share First Call A/c				5,000
	(Call in arrears on 200 shares @ ₹ 25 per share)

Cash Book (Bank Column)
Dr.					Cr.
Date	Particulars		J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Share Application			2,00,000
	Share Allotment			3,00,000
	Share first call			2,45,000		By Balance c/d		7,57,500
	Calls in Advance			12,500
				7,57,500				7,57,500

Working Note:

Money due on First Call for 10,000 shares @ 25 each			2,50,000
	Less: Calls in Arrear for 200 shares @ ₹ 25 per Share		(5,000)
	Money Received on First Call		2,45,000
	Add: Calls received in advance on 500 shares @ ₹25 per share		12,500
			2,57,500

Question 5: 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 and allotted 20,000 shares and rejected 4,000 shares and amount returned thereon. The money was duly received.
Give journal entries

Answer 5:

Books of Mohit Glass Ltd. Journal
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c		Dr.		7,20,000
		To Share Application A/c				7,20,000
	(Application money received on application for 24,000 shares @ ₹ 30 per share)
	Share Application A/c		Dr.		7,20,000
		To Share Capital A/c (Bank Column)				6,00,000
		To Bank A/c				1,20,000
	(Share Application of 20,000 shares @ ₹ 30 transferred to ShareCapital Account and the balance returned)
	Share Allotment A/c		Dr.		8,00,000
		To Share Capital A/c				6,00,000
		To Share Premium A/c				2,00,000
	(Allotment money due on 20,000 shares @ 40 per share including₹ 10 for premium)
	Bank A/c		Dr.		8,00,000
		To Share Allotment A/c				8,00,000
	(Allotment money received on 20,000 shares @ ₹ 40 per share)
	Share First Call A/c		Dr.		4,00,000
		To Share Capital A/c				4,00,000
	(Share First Call money due on 20,000 shares @ ₹ 20 per share)
	Bank A/c		Dr.		4,00,000
		To Share First Call A/c				4,00,000
	(Share First Call money received on 20,000 shares @ ₹ 20 pershare)
	Share Final Call A/c		Dr.		4,00,000
		To Share Capital A/c				4,00,000
	(Share Final Call money due on 20,000 shares @ ₹ 20 per share)
	Bank A/c		Dr.		4,00,000
		To Share Final Call A/c				4,00,000
	(Share Final Call money received on 20,000 shares @ ₹ 20 per share)

Question 6: 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 share was payable as under :

	Equity Shares	Preference Shares
On Application	Rs 3 per share	Rs 3 per share
On Allotment	Rs 5 per share	Rs 4 per share
	(including a premium)
On First Call	Rs 4 per share	Rs 3 per share

All the shares were fully subscribed, called-up and paid. Record these transactions in the journal and cash book of the company:

Answer 6:

Books of A Ltd. Journal
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Equity Share Application A/c		Dr.		3,00,000
	10% Preference Share Application A/c		Dr.		6,00,000
		To Equity Share Capital A/c				3,00,000
		To 10% Preference Share Capital A/c				6,00,000
	(Application money transferred to Equity Share Capital )
	Equity Share Allotment A/c		Dr.		5,00,000
	10% Preference Share Allotment A/c		Dr.		8,00,000
		To Equity Share Capital A/c				3,00,000
		To Securities Premium A/c				2,00,000
		To 10% Preference Share Allotment A/c				8,00,000
	(Amount due on allotment)
	Equity Share First and Final Call A/c		Dr.		4,00,000
	10% Preference Share First and Final Call A/c		Dr.		6,00,000
		To Equity Share Capital A/c				4,00,000
		To 10% Preference Share Capital A/c				6,00,000
	(Amount on First and Final call due)

Cash Book( Bank Column)
Dr.					Cr.
Date	Particulars		J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Equity Share Application			3,00,000
	10% Preference Share Application			6,00,000
	Equity Share Allotment			5,00,000
	10% Preference Share Allotment			8,00,000
	Equity Share First and Final Call			4,00,000		Balance c/d		32,00,000
	10% Preference Share First & Final Call			6,00,000
				32,00,000				32,00,000

Question 7: Eastern Company Limited, having an authorised capital of Rs 10,00,000 in shares of Rs 10 each, issued 50,000 shares at a premium of Rs 3 per share payable as follows :

On Application	Rs 3 per share
On Allotment (including premium)	Rs 5 per share
On first call (due three months after allotment) and the balance as and when required.	Rs 3 per share

Applications were received for 60,000 shares and the directors allotted the shares as follows :
(a) Applicants for 40,000 shares received in full.
(b) Applicants for 15,000 shares received an allotment of 8,000 shares.
(c) 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.

Answer 7: Note: In order to solve this question, applicants of category C has been assumed as 5000 instead of 500 and allotment to the applicants of this category has been taken as 2000 in place of 200.

Books of Eastern Company Limited
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Share Application A/c		Dr.		1,80,000
		To Share Capital A/c				1,50,000
		To Share Allotment A/c				30,000
	(Share Application money for 50,000 shares transferred to Share Capital Account and the excess money transferred to Share Allotment Account)
	Share Allotment A/c		Dr.		2,50,000
		To Share Capital A/c				1,00,000
		To Share Premium A/c				1,50,000
	(Allotment money due on 50,000 share @ ₹ 5 per share including ₹ 3 security premium)
	Share First Call A/c		Dr.		1,50,000
		To Share Capital A/c				1,50,000
	(First call due on 50,000 share @ ₹ 3 per share)

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Share Application		1,80,000
	Share Allotment		2,20,000		Balance c/d		5,49,700
	Share First Call		1,49,700
			5,49,700				5,49,700

Eastern Company Limited
Balance Sheet
Particulars	Note No.	Amount (₹)
I. Equity and Liabilities
1.Shareholders’ Funds
a. Share Capital	1	3,99,700
b. Reserves and Surplus	2	1,50,000
2.Non-Current Liabilities
3.Current Liabilities
Total		5,49,700
II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents	3	5,49,700
Total		5,49,700

NOTES TO ACCOUNTS

Note No.	Particulars		Amount  (₹)
1	Share Capital
	Authorised Share Capital
	1,00,000 shares of ₹ 10 each		10,00,000
	Issued Share Capital
	50,000 shares of ₹ 10 each		5,00,000
	Subscribed, Called up and Paid up Share Capital
	50,000 shares of ₹ 10 each, ₹ 8 called-up	4,00,000
	Less: Calls-in-Arrears	(300)	3,99,700
2	Reserves and Surplus
	Securities Premium		1,50,000
3	Cash and Cash Equivalents
	Cash at Bank		5,49,700

Question 8: Sumit Machine Ltd. issued 50,000 shares of Rs. 100 each at premium of 5%. The shares were payable Rs. 25 on application, Rs. 50 on allotment and Rs. 30 on first and final call. The issue was fully subscribed and money was duly received except the final call on 400 shares. The premium was adjusted on allotment. Give journal entries and prepare balance sheet.

Answer 8:

Books of Sumit Machine Ltd.
Date	Particulars			L.F.	DebitAmount(₹)	CreditAmount(₹)
	Bank A/c		Dr.		12,50,000
		To Share Application A/c				12,50,000
	(Share Application money received on application for 50,000 shares @ ₹25 per share)
	Share Application A/c		Dr.		12,50,000
		To Share Capital A/c				12,50,000
	(Share Application money of 50,000 shares transferred to Share Capital Account)
	Share Allotment A/c		Dr.		25,00,000
		To Share Capital A/c				22,50,000
		To Securities Premium A/c				2,50,000
	(Share Allotment money due on 50,000 shares @ ₹45 each at a premium of ₹5)
	Bank A/c		Dr.		25,00,000
		To Share Allotment A/c				25,00,000
	(Allotment money received for 50,000 shares @ ₹50 per share)
	Share First and Final Call A/c		Dr.		15,00,000
		To Share Capital A/c				15,00,000
	(Share First and Final call due on 50,000 shares @ ₹30 per share)
	Bank A/c		Dr.		14,88,000
	Calls in Arrears A/c		Dr.		12,000
		To Share First and Final Call A/c				15,00,000
	(Share First and Final Call received except 400 shares)

Sumit Machine Ltd.

Balance Sheet

Particulars	Note No.	Amount (₹)
I. Equity and Liabilities 1. Shareholders’ Fundsa. Share Capital b. Reserves and Surplus 2. Non-Current Liabilities 3. Current Liabilities	1 2	49,88,000 2,50,000
Total		52,38,000
II. Assets Non-Current AssetsCurrent Assets a. Cash and Cash Equivalents	3	52,38,000
Total

Notes to Accounts

Note No.	Particulars		Amount  (₹)
1	Share Capital Authorised Share Capital …….. shares of ₹ 100 each  Issued Share Capital  50,000 shares of ₹ 100 each  Subscribed, Called-up and Paid-up Share Capital 50,000 shares of ₹ 100 each Less: Calls-in-Arrears	50,00,000 (12,000)	50,00,000   49,88,000
2	Reserves and Surplus Securities Premium Reserve		2,50,000
3	Cash and Cash Equivalents Cash at Bank		52,38,000

Question 9: 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%.

Answer 9: Case (a)

Books of Kumar Ltd
Date	Particulars			L.F.	DebitAmount(₹)	CreditAmount(₹)
	Sundry Assets A/c		Dr.		6,30,000
		To Bhanu Oil Ltd				6,30,000
	(Assets purchased from Bhanu Oil Ltd.)
(a)	Bhanu Oil Ltd		Dr.		6,30,000
		To Share Capital A/c				6,30,000
	(6,300 shares issued at par to Bhanu Ltd.)

No. of shares issued at par = \(\frac{\text{Amount payable}}{\text{face value}}\)

6,300 shares = \(\frac{6,30,000}{100}\)

Case (b)

Date	Particulars				L.F.	DebitAmount(₹)	CreditAmount(₹)
	Sundry Assets A/c			Dr.		6,30,000
		To Bhanu Oil Ltd					6,30,000
	(Assets purchased from Bhanu Oil Ltd.)
	Bhanu Oil Ltd			Dr.		6,30,000
			To Share Capital A/c				5,25,000
			To Securities Premium A/c				1,05,000
	(5,250 share are issued at 20% premium to Bhanu Ltd. in consideration of assets purchased)

No. of shares issued at par = \(\frac{\text{Amount payabl}}{\text{Face value+Premium per share}}\)

5,250 shares = \(\frac{5,250}{100+2}\)

Question 10: Bansal Heavy Machine Ltd. purchased machine worth Rs.3,80,000 from Handa Trader. Payment was made as Rs.50,000 cash and 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.

Answer 10:

Book of Bansal Heavy Machine Ltd
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Machinery A/c		Dr.		3,20,000
		To Cash A/c				50,000
		To Handa Traders				2,70,000
	(Machine purchased from Handa Traders paid ₹ 50,000 incash immediately)
	Handa Trader		Dr.		2,79,000
	Discount on Issue of Shares A/c		Dr.		30,000
		To Share Capital A/c				3,00,000
	(3,000 share issued at ₹ 90 face value of ₹ 100 each toHanda Traders in consideration of amount due to him formachinery purchased)

Working Notes:-

Number of shares issued = \(\frac{\text{Amount payable}}{\text{issue price}}\)

= \(\frac{2,70,000}{90}\)

= 3,000 shares

Question 11: 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 calls money and Kumkum, who holding 100 shares did not pay both the calls. The directors forfeited the shares of Anubha and Kumkum.
Give journal entries.

Answer 11:

Books of Naman Ltd
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c		Dr.		5,00,000
		To Share Application A/c				5,00,000
	(Shares Application money received for 20,000 shares @ ₹ 25 each)
	Share Application A/c		Dr.		5,00,000
		To Share Capital				5,00,000
	(Share Application money of 20,000 shares @ ₹ 25 eachtransferred to Share Capital Account)
	Share Allotment A/c		Dr.		6,00,000
		To Share Capital A/c				6,00,000
	(Share Allotment due on 20,000 shares @ ₹ 30 each)
	Bank A/c		Dr.		5,94,000
		To Share Allotment A/c				5,94,000
	(Allotment money received for 19,800 shares @ ₹ 30 per share)
	Share First Call A/c		Dr.		5,00,000
		To Share Capital A/c				5,00,000
	(Share First Call money due on 20,000 @ ₹ 25 per share)
	Bank A/c		Dr.		4,92,500
		To Share First Call A/c				4,92,500
	(Share First Call received @ ₹ 25 per share for 19,700 shares)
	Share Final Call A/c		Dr.		4,00,000
		To Share Capital A/c				4,00,000
	(Share Final Call money due on 20,000 shares @ 20 per share)
	Bank A/c		Dr.		3,94,000
		To Share final call A/c				3,94,000
	(Share Final Call received @ ₹ 20 per Share  for 19,700shares and 300 shares failed to pay the call)
	Share Capital A/c		Dr.		30,000
		To Share Forfeiture A/c (200×25+100×55)				10,500
		To Share Allotment (200×30)				6,000
		To Share First Call A/c (300×25)				7,500
		To Share Final Call A/c (300×20)				6,000
	(300 Shares forfeited)

It can also be solved by debiting Calls in Arrears Account

Books of Naman Ltd
Date	Particulars				L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c			Dr.		5,00,000
		To Share Application A/c					5,00,000
	(Share Application money received on application for 20,000 shares @ ₹ 25 per share)
	Share Application A/c			Dr.		5,00,000
		To Share Capital A/c					5,00,000
	(Share Application money for 20,000 shares @ ₹ 25 per sharetransferred to Share Capital Account)
	Share Allotment A/c			Dr.		6,00,000
		To Share Capital A/c					6,00,000
	(Share Allotment money due on 20,000 shares @ ₹ 30 per share)
	Bank A/c			Dr.		5,94,000
	Calls in Arrears A/c			Dr.		6,000
		To Share Allotment A/c					6,00,000
	(Allotment money received for 19,800 shares @ ₹ 30 pershare and 200 shares failed to pay the Allotment)
	Share First Call A/c			Dr.		5,00,000
		To Share Capital A/c					5,00,000
	(Share First Call money due on 20,000 shares @ ₹ 25 per share)
	Bank A/c			Dr.		4,92,500
	Calls in Arrears A/c			Dr.		7,500
		To Share First Call A/c					5,00,000
	(Share First Call money for 19,700 shares @ ₹ 25each received except 300 shares)
	Share Final Call A/c			Dr.		4,00,000
		To Share Capital A/c					4,00,000
	(Share Final Call money due on 20,000 shares @ ₹ 20 per share)
	Bank A/c			Dr.		3,94,000
	Calls in Arreras A/c			Dr.		6,000
		To Share final call A/c					4,00,000
	(Share Final Call money received for 19,700 shares @ ₹ 20 per shareexcept 300 shares)
	Share Capital A/c			Dr.		30,000
		To Share Forfeiture A/c (200×25+100×55)					10,500
		To Calls in Arrears A/c					19,500
	(300 Shares forfeited on account failed to pay the money due)

Working Note:

1. Forfeited Amount

Amount on application	(300 shares @ ₹ 25 each)	=	7,500
Amount on allotment	(100 Shares @ ₹ 30 each)	=	3,000
			10,500

Question 12: Kishna Ltd issued 15,000 shares of Rs 100 each at a premium of Rs 10 per share, payable as follows:

On application	Rs 30
On allotment	Rs 50 (including premium)
On first and final call	Rs 30

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 share of Rs 12 each. Give journal entries in the books of the company.

Answer 12:

Books of Krishna Ltd
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c		Dr.		4,50,000
		To Share Application A/c				4,50,000
	(Share Application money received for 15,000 shares @ ₹ 30 per share)
	Share Application A/c		Dr.		4,50,000
		To Share Capital A/c				4,50,000
	(Share Application money of 15,000 shares transferred to ShareCapital Account)
	Share Allotment A/c		Dr.		7,50,000
		To Share Capital A/c				6,00,000
		To Securities Premium A/c				1,50,000
	(Share Allotment money on 15,000 shares @ ₹ 50 per shareincluding ₹ 10 securities premium due)
	Bank A/c		Dr.		7,42,500
		To Share Allotment A/c				7,42,500
	(Share Allotment received on 14,850 shares and 150 sharesfailed to pay the money due)
	Share First and Final Call A/c		Dr.		4,50,000
		To Share Capital A/c				4,50,000
	(Share First and Final Call for 15,000 shares @ ₹ 30 per share due)
	Bank A/c		Dr.		4,45,500
		To Share First and Final Call A/c				4,45,500
	(Share First and Final Call received for 14,850 shares @ ₹ 30 per share and 150 shares failed to pay amount due)
	Share Capital A/c (150×100)		Dr.		15,000
	Share Premium A/c (150×10)		Dr.		1,500
		To Share Allotment A/c (150×50)				7,500
		To Share First and Final Call A/c (150×30)				4,500
		To Share Forfeiture A/c (150×30)				4,500
	(150 shares forfeited for non-payment of Share Allotment and ShareFirst and Final Call  )
	Bank A/c		Dr.		18,000
		To  Share Capital A/c				15,000
		To Securities Premium A/c				3,000
	(150 shares of ₹ 100 each reissued @ ₹ 120 to Neha)
	Share Forfeiture A/c		Dr.		4,500
		To Capital Reserve A/c				4,500
	(Balance of Share Forfeiture Account transferred to Capital ReserveAccount)

Note: In the solution, the reissued price of ₹ 12 has been assumed as ₹ 120 per share.

Question 13: Arushi Computers Ltd. issued 10,000 equity shares of Rs. 100 each at 10% premium. The net amount payable as follows:

On application	Rs. 20
On allotment	Rs. 50 (Rs. 40 + premium Rs. 10)
On first call	Rs. 30
On final call	Rs. 10

A shareholder holding 200 shares did not pay 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.

Answer 13:

Books of Arushi Computers Ltd.
Date	Particulars			L.F.	DebitAmount(₹)	CreditAmount(₹)
	Bank A/c		Dr.		2,00,000
		To Share Application A/c				2,00,000
	(Share Application money received for 10,000 shares @ ₹20 per share)
	Share Application A/c		Dr.		2,00,000
		To Share Capital A/c				2,00,000
	(Share Application money for 10,000 shares transferred to ShareCapital Account)
	Share Allotment A/c		Dr.		5,00,000
		To Share Capital A/c				4,00,000
		To Securities Premium Reserve A/c				1,00,000
	(Allotment money due on 10,000 shares @ ₹40 per shareexcluding premium ₹10)
	Bank A/c		Dr.		5,00,000
		To Share Allotment A/c				5,00,000
	(Share Allotment money received for 10,000 shares @ ₹50 pershare)
	Share First Call A/c		Dr.		3,00,000
		To Share Capital A/c				3,00,000
	(Share First Call money due on 10,000 shares @ ₹30 per share)
	Bank A/c		Dr.		3,00,000
		To Share First Call A/c				3,00,000
	(First Call money received for 10,000 shares @ ₹30 per share)
	Share Final Call A/c		Dr.		1,00,000
		To Share Capital A/c				1,00,000
	(Final Call money due on 10,000 shares @ ₹10 per share)
	Bank A/c		Dr.		98,000
		To Share final call A/c				98,000
	(Final Call money received for 9800 shares @ ₹10 per share and 200 shares failed to pay)
	Share Capital A/c (200×100)		Dr.		20,000
		To Share Final Call A/c (200×10)				2,000
		To Share Forfeiture A/c (200×90)				18,000
	(200 shares forfeited for non-payment of Final Call ₹ 10 per share)
	Bank A/c (150×75)		Dr.		11,250
	Share Forfeiture A/c (150×25)		Dr.		3,750
		To Share Capital A/c (150×100)	Dr.			15,000
	(150 forfeited shares reissued at ₹100 per share for ₹75)
	Share Forfeiture A/c		Dr.		9,750
		To Capital Reserve A/c				9,750
	(Balance of 150 reissue shares after adjustment transferred toCapital Reserve Account)

Working Notes:

Amount Transferred to Capital Reserve A/c

Amount credited to Share Forfeiture	₹ 90 per share
Less: Amount debited to Share Forfeiture	₹25 per share
Balance after adjustment	₹ 65 per share

Amount transferred to Capital Reserve Account = Balance per share after adjustment × Number of shares reissued

₹ 9,750 = ₹ 65 × ₹ 150 per share

Question 14: Raunak Cotton Ltd. issued a prospectus inviting applications for 6,000 equity shares of Rs 100 each at a premium of Rs 20 per shares, payable as follows:

On application	Rs 20
On allotment	Rs 50 (including premium)
On first call	Rs 30
On final call	Rs 20

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 on the application was adjusted toward the amount due on allotment.

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

Give journal entries in the books of the company.

Answer 14:

Books of Raunak Cotton Ltd.
Date	Particulars					L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c				Dr.		2,00,000
				To Share Application A/c				2,00,000
	(Share Application money received on 10,000 shares)
	Share Application A/c				Dr.		2,00,000
				To Share Capital A/c				1,20,000
				To Share Allotment A/c				40,000
				To Bank				40,000
	(Share Application money adjusted)
	Share Allotment A/c				Dr.		3,00,000
				To Share Capital A/c				1,80,000
				To Share Premium A/c				1,20,000
	(Share allotment money due)
	Bank A/c				Dr.		2,47,000
				To Share Allotment A/c				2,47,000
	(Allotment money received except 300 shares)
	Share First Call A/c				Dr.		1,80,000
				To Share Capital A/c				1,80,000
	(Share First Call money due)
	Bank A/c				Dr.		1,57,500
			To Share First Call A/c					1,57,500
	(Share First Call money received except 750 (300+450 shares)
	Share Final Call A/c				Dr.		1,20,000
			To Share Capital A/c					1,20,000
	(Share Final Call money is due)
	Bank A/c				Dr.		1,05,000
			To Share Final Call					1,05,000
	(Share Final Call money received except 750 shares)
	Share Capital A/c (750×100)				Dr.		75,000
	Share Premium A/c (300×20)				Dr.		6,000
			To Share Allotment A/c					13,000
			To Share first call A/c (750×30)					22,500
			To Share final call A/c (750×20)					15,000
			To Share Forfeiture A/c					30,500
	(750 shares were forfeited)
	Bank A/c				Dr.		60,000
	Share Forfeiture A/c				Dr.		15,000
		To Share Capital A/c						75,000
	(Forfeited shares reissued @ 80 per share)
	Share Forfeiture A/c				Dr.		15,500
		To Capital Reserve A/c						15,500
	(Share Forfeiture Account transferred capital reserve)

Working Note:

Number of shares applied by rohit

= \(\frac{\text{total number of applied shares}}{\text{total number of allotted shares}}\)×number of allotted shares

= \(\frac{8000}{6000}\)

= 400 shares

2. Call in arrears by Rohit on allotment

Money received on Application		(400×20)	8,000
	Less: Transferred to share capital	(300×20)	6,000
Excess adjusted on allotment			2,000
Allotment due		(300×50)	15,000
	Less: Excess adjustment on allotment		2,000
Call in arrear			13,000

Number of shares applied by rohit

= \(\frac{\text{total number of applied shares}}{\text{total number of allotted shares}}\)×number of applied shares

= \(\frac{6000}{8000}\)×600

= 450 shares

4. Share Forfeiture amount

Amount on application
	300×20	6,000
	450×20	9,000
Excess amount received from Rohit for allotment on pro-rata basis		2,000
Amount received on Allotment by Kartika		13,500
		30,500

Question 15: 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 :

With Application	Rs 3 per share
On allotment (including premium)	Rs 5 per share
On First call	Rs 2 per share
On Second and Final call	Rs 2 per share

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

Rohan, 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.

Answer 15:

Books of Himalaya Company Ltd.Journal
Date	Particulars		L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c	Dr.		4,80,000
	To Share Application A/c				4,80,000
	(Share Application money received for 1,60,000 shares @ ₹ 3 per share)
	Share Application A/c	Dr.		4,80,000
	To Equity Share Capital A/c				3,60,000
	To Share Allotment A/c				1,20,000
	(Share Application for 1,20,000 shares @ ₹ 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)
	Share Allotment A/c	Dr.		6,00,000
	To Equity Share Capital A/c				3,60,000
	To Securities Premium				2,40,000
	(Share Allotment due on 1,20,000 shares @ ₹ 5 per share including ₹ 2 Securities Premium)
	Bank A/c	Dr.		4,80,000
	To Share Allotment A/c				4,80,000
	(Share allotment for 1,20,000 shares @ ₹ 5 per share received)
	Share First Call A/c	Dr.		2,40,000
	To Equity Share Capital A/c				2,40,000
	(Share First Call due on 1,20,000 shares @ ₹ 2 per share)
	Bank A/c	Dr.		2,30,400
	To Share First Call A/c				2,30,400
	(Share First Call received on 1,15,200 shares @ ₹ 2 per share and 4,800 shares failed to pay)
	Share Final Call A/c	Dr.		2,40,000
	To Equity Share Capital A/c				2,40,000
	(Share Final call due on 1,20,000 shares @ ₹ 2 per share)
	Bank A/c	Dr.		2,30,400
	To Share Final Call A/c				2,30,400
	(Share Final Call received on 1,15,200 shares @ ₹ 2 per share and 4,800 shares failed to pay)
	Equity Share Capital A/c (4,800×10)	Dr.		48,000
	To  Share First Call A/c (4,800×2)				9,600
	To  Share Final Call A/c (4,800×2)				9,600
	To  Share Forfeiture A/c (4,800×6)				28,800
	(4,800 shares forfeited for the non-payment of First Call and Final Call)
	Bank A/c	Dr.		33,600
	Share Forfeiture A/c	Dr.		14,400
	To  Equity Share Capital				48,000
	(4,800 shares reissued @ ₹ 7 per share, fully paid-up)
	Share Forfeiture A/c	Dr.		14,400
	To Capital Reserve A/c				14,400
	(Share forfeiture balance of 4,800 shares  transferred to Capital Reserve Account)

Question 16: 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:

With Application	Rs. 2
On Allotment (including premium)	Rs. 5
On First Call	Rs. 3
On Second Call	Rs. 3

Applications were received for 30,000 shares and allotment was made on 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.

Answer 16:

Books of Prince LimitedJournal
Date	Particulars			L.F.	DebitAmount(₹)	CreditAmount(₹)
	Bank A/c		Dr.		60,000
		To Share Application A/c				60,000
	(Share Application money received on 30,000 shares @₹ 2 per share)
	Share Application A/c		Dr.		60,000
		To Share Capital A/c				40,000
		To Share Allotment A/c				20,000
	(Application money on 20,000 shares transferred to Share Capital Account and the balance adjusted on allotment)
	Share Allotment A/c		Dr.		1,00,000
		To Share Capital A/c				40,000
		To Securities Premium A/c				60,000
	(Allotment money due on 20,000 shares @ ₹5 per share including premium of ₹ 3 per share)
	Bank A/c (1,00,000 – 20,000 – 1,600)		Dr.		78,400
		To Share Allotment A/c				78,400
	(Allotment money received)
	Share First Call A/c		Dr.		60,000
		To Share Capital A/c				60,000
	(Share First Call due on 20,000 shares @ ₹3 per share)
	Bank A/c (60,000 – 1,200 – 1,800)		Dr.		57,000
		To Share First Call A/c				57,000
	(First call money received)
	Share Capital A/c		Dr.		2,800
	Securities Premium A/c		Dr.		1,200
		To Share Forfeiture A/c				1,200
		To Share Allotment A/c				1,600
		To Share First Call A/c				1,200
	(400 shares forfeited after first call)
	Share Second Call A/c		Dr.		58,800
		To Share Capital A/c				58,800
	(Final Call money due on 19,600 shares @ ₹3 per share)
	Bank A/c (58,800 – 1,800)		Dr.		57,000
		To Share Second Call A/c				57,000
	(Second Call money received except on 600 shares)
	Share Capital A/c		Dr.		6,000
		To Share Forfeiture A/c				2,400
		To Share First Call A/c				1,800
		To Share Second Call A/c				1,800
	(600 shares forfeited)
	Bank A/c		Dr.		7,200
	Share Forfeiture A/c		Dr.		800
		To Share Capital A/c				8,000
	(800 Shares reissued @ ₹ 9 each)
	Share Forfeiture A/c		Dr.		2,000
		To Capital Reserve				2,000

As per the Revised Schedule VI, the Balance Sheet of Prince Limited is as follows:

Prince Limited
Balance Sheet
Particulars	Note No.	Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Fund
a. Share Capital	1	1,98,000
b. Reserves and Surplus	2	61,600
2. Non-Current Liabilities
3. Current Liabilities
Total		2,59,600
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,59,600
Total		2,59,600

NOTES TO ACCOUNTS

Note No.	Particulars		Amount  (₹)
1	Share Capital
	Authorised Share Capital
	…….. shares of ₹10 each		–
	Issued Share Capital
	20,000 shares of ₹10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,800 shares of ₹10 each		1,98,000
2	Reserves and Surplus
	Securities Premium	58,800
	Capital Reserve	2,800	61,600
3	Cash and Cash Equivalents
	Cash at Bank		2,59,600

Working Notes:

Number of shares applied by mohit

= \(\frac{\text{total number of applied shares}}{\text{total number of allotted shares}}\)×number of allotted shares

= \(\frac{3,00,000}{2,00,000}\)×400

= 600 shares

Money received on Application		(600×2)	1,200
	Less: Utilised on application	(400×2)	(800)
Excess amount received			400

Amount due on Allotment		(400×5)	2,000
	Less: Excess amount received		(400)
Amount due on allotment			1,600

2. Amount to be transferred to Capital Reserve

Amount forfeited on Mohit’s 400 shares		1,200
Amount forfeited on Joly’s 600 shares	2,400
Amount forfeited on Joly’s 400 shares		1,600
		2,800
Less: Discount allowed on 800 shares reissued		(800)
Amount to be transferred to Capital Reserve		2,000

Question 17: 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. 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.

Answer 17:

Books of Life machine tools Limited
Date	Particulars				L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c			Dr.		3,50,000
		To Share Application A/c					3,50,000
	(Application money received on application for 70,000 shares @ ₹ 5 per share including premium ₹ 2)
	Share Application A/c			Dr.		3,50,000
		To Share Capital A/c					1,50,000
		To Securities Premium A/c					1,00,000
		To Share Allotment A/c					60,000
		To Bank A/c					40,000
	(Share Application money for 50,000 shares transferred to ShareCapital Account and Securities Premium,  ₹ 60,000adjusted to Allotment and ₹ 40,000 returned)
	Share Allotment A/c			Dr.		2,00,000
		To Share Capital A/c					2,00,000
	(Share Allotment money due on 50,000 shares @ ₹ 4 per share)
	Bank A/c			Dr.		1,40,000
		To Share Allotment A/c					1,40,000
	(Share Allotment money received on share allotment)
	Share First and Final A/c			Dr.		1,50,000
		To Share Capital A/c					1,50,000
	(Share First and Final Call money due on 50,000 shares @ ₹ 3 per share)
	Bank A/c			Dr.		1,48,500
		To Share First and Final A/c					1,48,500
	(Share First and Final Call money received from 49,500 shares @ ₹ 3 per share and 500 shares failed to pay)
	Share Capital A/c (500×10)			Dr.		5,000
		To Share First and Final Call A/c (500×3)					1,500
		To Share Forfeiture A/c (500×7)					3,500
	(500 shares @ ₹ per share fully paid up forfeited for the non-payment of Share First and Final Call ₹ 3 per share)
	Bank A/c			Dr.		4,000
	Share Forfeiture A/c			Dr.		1,000
		To Share Capital A/c					5,000
	(500 Shares reissued @ 8 per share fully paid up)
	Share Forfeiture A/c			Dr.		2,500
		To Capital Reserve A/c					2,500
	(Balance of 500 shares in Forfeiture Account afteradjustment, transferred to Capital Reserve Account)

Question 18: 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 were 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.

Answer 18:

Books of Orient Company LimitedJournal
Date	Particulars				L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c			Dr.		52,000
		To Share Application A/c					52,000
	(Share Application Money received for 26,000 shares@ ₹ 2 per share)
	Share Application A/c			Dr.		52,000
		To Share Capital A/c					40,000
		To Share Allotment A/c					4,000
		To Bank A/c					8,000
	(Application money  @ ₹ 2 per share of 20,000 sharestransferred to Share Capital Account and money of 4,000 shares returned, remaining to Share Allotment)
	Share Allotment A/c			Dr.		80,000
		To Share Capital A/c					60,000
		To Securities Premium A/c					20,000
	(Share Allotment money due on 20,000 shares @ ₹ 4 per share including Re 1 Securities Premium)
	Bank A/c			Dr.		76,000
		To Share Allotment A/c					76,000
	(Share Allotment Money received for all the shares afteradjustment of money transferred from Share Application)
	Share First Call A/c			Dr.		60,000
		To Share Capital A/c					60,000
	(Share First Call money due on 20,000 share @ ₹ 2 per share)
	Bank A/c			Dr.		60,000
		To Share First Call A/c					60,000
	(Share First Call received for 20,000 shares @ ₹ 2 per share)
	Share Second and Final Call A/c			Dr.		40,000
		To Share Capital A/c					40,000
	(Share Second and Final  Call money due on 20,000 shares @ ₹ 2 per share)
	Bank A/c			Dr.		39,000
		To Share Second and Final Call A/c					39,000
	(Share Second and Final Call money received for 19,500 shares @ ₹ 2 per share and 500 shares failed to pay)
	Share Capital A/c			Dr.		5,000
		To Share Second and Final Call A/c					1,000
		To Share Forfeiture A/c					4,000
	(500 shares  of ₹ 10 per share fully called-up forfeited fornon-payment of Second and Final Call ₹ 2 per share)
	Bank A/c			Dr.		2700
	Share Forfeiture A/c			Dr.		300
		To Share Capital A/c					3,000
	(300 shares @ ₹ 10 each reissued for ₹ 9 per share fully paid-up)
	Share Forfeiture A/c			Dr.		2,100
		To Capital Reserve A/c					2,100
	(Balance of 300 shares in Share Forfeiture Account transferredto Capital Reserve Account, after adjustment)

Orient Company Limited
Balance Sheet
Particulars	Note No.	Amount(₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,600
b. Reserves and Surplus	2	22,100
2. Non-Current Liabilities
3. Current Liabilities
Total		2,21,700
II. Assets
1. Non-Current Assets
2. Current Assets
Cash and Cash Equivalents	3	2,21,700
Total		2,21,700

NOTES TO ACCOUNTS

Note No.	Particulars		Amount(₹)
1	Share Capital
	Authorised Equity Share Capital
	…….. Equity Shares of ₹ 10 each		–
	Issued Equity Share Capital
	20,000 Equity Shares of ₹ 10 each		2,00,000
	Subscribed, Called-up and Paid-up Equity Share Capital
	19,800 Equity Shares of ₹ 10 each	1,98,000
	Add: Shares Forfeiture	1,600	1,99,600
2	Reserves and Surplus
	Securities Premium	20,000
	Capital Reserve	2,100	22,100
3	Cash and Cash Equivalents
	Cash at Bank		2,21,700

Working Notes:

Share Forfeiture Account  credited	₹ 8 per share
Less: Share Forfeiture Account debited	₹ 1 per share
Amount  transferred to Capital Reserve Account, after adjustment	₹ 7 per share

Amount transferred to Capital Reserve Account, after adjustment for 300 shares = 300 Shares @ ₹ 7 per share = ₹ 2,100

Question 19: Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the following terms :

Payable on application	Rs 5 per share
Payable on allotment	Rs 3 per share
Payable on first and final call	Rs 2 per share

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

(a) to refuse allotment to the applicants for 20,000 shares;

(b) to allot in full to applicants for 80,000 shares;

(c) to allot the balance of the available shares’ pro-rata among the other applicants; and

(d) to utilise excess application money in part as payment of allotment money.

One applicant, whom shares had been allotted on 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 Cash book to record the above.

Answer 19:

In the books of Alfa LimitedJournal
Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Share Application A/c		Dr.		24,00,000
		To Share Capital A/c				20,00,000
		To Share Allotment A/c				4,00,000
	(Share Application money adjusted)
	Share Allotment A/c		Dr.		12,00,000
		To Share Capital A/c				12,00,000
	(Share Allotment money due)
	Share First and Final Call A/c		Dr.		8,00,000
		To Share Capital A/c				8,00,000
	(Share First and Final Call due)

Working Note:

Number of shares apllied by applicant 

= \(\frac{\text{total number of applied shares}}{\text{total number of allotted shares}}\)×number of allotted shares

= \(\frac{4,00,000}{3,20,000}\)×400

= 500 shares

2. Call in arrears by applicant on allotment

Money received on Application	(500×5)	=	2,500
Less: Amount adjusted on Application	(400×5)	=	2,000
Amount adjusted on Allotment			500

3.

	Money due on Allotment	(400×3)	1,200
	Less: Money adjusted		500
	Balance due on Allotment		700

Date	Particulars			L.F.	DebitAmount₹	CreditAmount₹
	Share Capital A/c		Dr.		4,000
		To Share Allotment A/c				700
		To Share First & Final Call A/c				800
		To Share Forfeiture A/c				2,500
	(400 shares forfeited)
	Share Forfeiture A/c		Dr.		400
		To Share Capital A/c				400
	(Share reissued and loss on issue charged from Share ForfeitureAccount)
	Share Forfeiture A/c		Dr.		2,100
		To Capital Reserve A/c				2,100
	(Share Forfeiture Account transferred to Capital Reserve Account)

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Share Application		25,00,000		Share Application		1,00,000
	Share Allotment		7,99,300		Balance c/d		40,02,100
	Share First and Final Call		7,99,200
	Share Capital		3,600
			41,02,100				41,02,100

Question 20: 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 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 Share Forfeiture Account.

Answer 20:

Books of Ashoka LimitedJournal
Date	Particulars			L.F.	DebitAmount(₹)	CreditAmount(₹)
	Share Capital A/c		Dr.		20,000
		To Final Call A/c				2,000
		To Share Forfeiture A/c				18,000
	(1,000 Shares of 20 per share forfeited for nonpayment of Share FinalCall money @ ₹2 per share)
	Bank A/c (400×14)		Dr.		5,600
	Share Forfeiture A/c (400×6)		Dr.		2,400
		To Share Capital A/c				8,000
	(400 shares @ ₹20 per share reissued for ₹14 per share fullypaid-up)
	Bank A/c		Dr.		4,000
		To Share Capital A/c				4,000
	(200 shares @ ₹20 per share reissued for ₹20 per share fullypaid-up)
	Share Forfeiture A/c		Dr.		8,400
		To Capital Reserve				8,400
	(Balance of 600 shares in Share Forfeiture Account transferred toCapital Reserve Account, after reissue)

Balance in Share Forfeiture Account (18,000 – 10,800) = ₹ 7,200

Working Notes:

For 400 Shares

Share Forfeiture Account credited	₹18 per share
Less: Share Forfeiture Account debited	₹6 per share
Amount  transferred to Capital Reserve Account, after adjustment	₹12 per share

Amount of 400 shares transferred to Capital Reserve Account, after reissue

= 400 Shares @ ₹ 12 per share

= ₹ 4,800

For 200 Shares

Share Forfeiture Account credited	₹18 per share
Less: Share Forfeiture Account debited	Nil
Amount  transferred to Capital Reserve Account, after adjustment	₹18 per share

Amount of 200 shares transferred to Capital Reserve Account, after reissue

= 200 Shares @ ₹ 18 per share

= ₹3,600

Total amount transferred to Capital Reserve Account for 600 shares	= Capital Reserve for 400 shares + Capital Reserve for 200 shares
	= 4,800 + 3,600
	= ₹8,400

Note: As per the answer amount transferred to capital reserve is ₹6,800 however, it is not correct as the shares reissued at a discount will be provided through Share Forfeiture Account and the valance will be ​₹8,400.

Question 21: Amit holds 100 shares of Rs.10 each on which he has paid Re.1 per share as application money. Bimal holds 200 shares of Rs.10 each on which he has paid Re.1 and Rs.2 per share as application and allotment money, respectively. Chetan holds 300 shares of Rs.10 each and has paid Re.1 on application, Rs.2 on allotment and Rs.3 for the first call. They all failed to pay their arrears and the second call of Rs.2 per share and the directors, therefore, forfeited their shares. The shares are reissued subsequently for Rs.11 per share as fully paid. Journalise the transactions.

Answer 21:

Date	Particulars				L.F.	DebitAmount₹	CreditAmount₹
	Share Capital A/c (600×8)			Dr.		4,800
		To Share Allotment (100×2)					200
		To Share First Call A/c (300×3)					900
		To Share Second Call A/c (600×2)					1,200
		To Share Forfeiture A/c					2,500
	(600 shares @ ₹ 10 per share ₹ 8 called-up forfeited aftermaking Second Call)
	Bank A/c			Dr.		6,600
		To Share Capital A/c					6,000
		To Securities Premium A/c					600
	(600 shares @ ₹ 10 each for ₹ 11 per share fully paid-upreissued)
	Share Forfeiture A/c			Dr.		2,500
		To Capital Reserve A/c					2,500
	(Balance of Share Forfeiture Account transferred to CapitalReserve Account after reissue)

Working Notes:

Share Forfeiture Account credited
	Amit		(100×1)	=	100
	Bimal		(200×3)	=	600
	Chetan		(300×6)	=	1,800
					2,500

Question 22: Ajanta Company Limited having a nominal 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.

Answer 22:

Books of Ajanta Company Limited
Date	Particulars				L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c			Dr.		48,000
		To Share Application A/c					48,000
	(Share Application money received for  24,000 shares @ ₹ 2 per share)
	Share Application A/c			Dr.		48,000
		To Share Capital A/c					40,000
		To Bank A/c					8,000
	(Share Application @ ₹ 2 per share for 20,000 shares  transferred to Share Capital and remaining for 4,000 shares rejected)
	Share Allotment A/c			Dr.		60,000
		To Share Capital A/c					60,000
	(Share Allotment money due @ ₹ 3 per share on 20,000 shares )
	Bank A/c			Dr.		60,000
		To Share Allotment A/c					60,000
	(Share Allotment money received for 20,000 shares  @ ₹ 3per share)
	Share First Call A/c			Dr.		50,000
		To  Share Capital A/c					50,000
	(Share First Call money due on 20,000 Shares @ ₹ 2.5 per share)
	Bank A/c			Dr.		50,000
		To Share First Call A/c					50,000
	(Share First Call money received for 20,000 shares @ ₹ 2.5 per share)
	Share Final Call A/c			Dr.
		To Share Capital A/c
	(Share Final Call money due on 20,000 Shares @ ₹ 2.5 per share)
	Bank A/c			Dr.		48,500
	Calls in Arrears A/c			Dr.		1,500
		To Share Final Call A/c					50,000
	(Share Final Call money received for 19,400 shares @ ₹ 2.5 per share except 600 shares)
	Share Capital A/c			Dr.		6,000
		To Calls in Arrears A/c					1,500
		To Share Forfeiture A/c					4,500
	(600 Shares forfeited @ ₹ 10 each for the non-payment of ShareFinal Call @  ₹ 2.5 per share)
	Bank A/c			Dr.		3,600
	Share Forfeiture A/c			Dr.		400
		To Share Capital A/c					4,000
	(400 shares @ ₹ 10 each for ₹ 9 per share reissued)
	Share Forfeiture Account			Dr.		2,600
		To Capital Reserve A/c					2,600
	(After reissue balance of 400 shares in Forfeiture Account transferred to Capital Reserve Account)

Ajanta Company Limited
Balance Sheet
Particulars	Note No.	Amount(₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,500
b. Reserves and Surplus	2	2,600
2. Non-Current Liabilities
3. Current Liabilities
Total		2,02,100
II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents	3	2,02,100
Total		2,02,100

NOTES TO ACCOUNTS

Note No.	Particulars		Amount(₹)
1	Share Capital
	Authorised Share Capital
	30,000 shares of ₹ 10 each		3,00,000
	Issued Share Capital
	20,000 shares of ₹ 10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,800 shares of ₹ 10 each	1,98,000
	Add: Shares Forfeiture	1,500	1,99,500
2	Reserves and Surplus
	Capital Reserve		2,600
3	Cash and Cash Equivalents
	Cash at Bank		2,02,100

Working Note:

Share Forfeiture Account credited	₹ 7.5 per share
Less: Share Forfeiture Account debited	₹1 per share
Amount  transferred to Capital Reserve Account, after adjustment	₹ 6.5 per share

Amount of 400 shares transferred to Capital Reserve Account, after reissue = 400 Shares @ ₹ 6.5 per share = ₹ 2,600

Question 23: Journalise the following transactions in the books Bhushan Oil Ltd.:
(a) 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.
(b) 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.
(c) 400 shares of Rs. 50 each issued at par were forfeited for non-payment of final call of Rs. 10 per share. These shares were reissued at Rs. 45 per share fully paid-up.

Answer 23:

Books of Bhushan Oil Ltd.
Date	Particulars					L.F.	DebitAmount(₹)	CreditAmount(₹)
	Share Capital A/c (200 × 80)				Dr.		16,000
	Securities Premium A/c (200 × 10)				Dr.		2,000
		To Share Allotment A/c (200 × 60)						12,000
		To Share Forfeiture A/c (200 × 30)						6,000
	(200 shares forfeited @ ₹100 each  issued at a premium of₹10 for the nonpayment of allotment money  ₹60 per share)
	Bank A/c (200 × 70)				Dr.		14,000
	Share Forfeiture A/c (200 × 30)				Dr.		6,000
		To Share Capital A/c (200 × 100)						20,000
	(200 shares reissued @ ₹70 per share fully paid-up)

Case (b)

Date	Particulars				L.F.	DebitAmount(₹)	CreditAmount(₹)
	Share Capital A/c			Dr.		900
	Securities Premium A/c			Dr.		600
		To Share Allotment A/c					1,200
		To  Share Forfeiture A/c					300
	(150 shares @ ₹10 each forfeited for nonpayment of allotmentmoney ₹ 8 per share including premium ₹4)
	Bank A/c			Dr.		2,250
		To Share Capital A/c					1,500
		To Securities Premium A/c					750
	(150 shares @ ₹10 each reissued For  ₹15 per share fullypaid-up)
	Share Forfeiture A/c			Dr.		300
		To Capital Reserve A/c					300
	(Balance of Share Forfeiture Account transferred to CapitalReserve Account)

Case (c)

Date	Particulars			L.F.	DebitAmount(₹)	CreditAmount(₹)
	Share Capital A/c		Dr.		20,000
		To Share Final Call A/c				4,000
		To Share Forfeiture A/c				16,000
	(400 shares @ ₹ 50 per share forfeited for nonpayment of FinalCall ₹ 10 per share)
	Bank A/c		Dr.		18,000
	Share forfeiture A/c		Dr.		2,000
		To Share Capital A/c				20,000
	(400 shares @ ₹50 each reissued for  ₹45 fully paid-up)
	Share Forfeiture A/c		Dr.		14,000
		To Capital Reserve A/c				14,000
	(Balance in Share Forfeiture Account  transferred to CapitalReserve Account)

Question 24: Amisha Ltd. invited 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 second and final call Rs.15.
Applications were received for 50,000 shares and allotment was made on prorata basis. Excess money on application was adjusted against 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 her 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.

Answer 24:

Books of Amisha Ltd.
Date	Particulars						L.F.	DebitAmount₹	CreditAmount₹
	Bank A/c					Dr.		20,00,000
		To Share Application A/c							20,00,000
	(Share Application money received on 50,000 shares @ 40 per share)
	Share Application A/c					Dr.		20,00,000
		To Share Capital A/c							16,00,000
		To Share Allotment A/c							4,00,000
	(Share Application money adjusted)
	Share Allotment A/c					Dr.		16,00,000
		To Share Capital A/c							8,00,000
		To Share Premium A/c							8,00,000
	(Share Allotment money due including premium)
	Bank A/c					Dr.		11,82,000
		To Share Allotment A/c							11,82,000
	(Share Allotment money received except 600 shares)
	Share Capital A/c				Dr.			36,000
	Share premium A/c				Dr.			12,000
				To Share Allotment A/c					18,000
				To Share Forfeiture A/c					30,000
	(600 shares forfeited after allotment)
	Share First Call A/c				Dr.			9,85,000
				To Share Capital					9,85,000
	(First Call money in due on 39,400 shares)
	Bank A/c				Dr.			9,65,000
				To Share First Call A/c					9,65,000
	(First Call money received except 800 shares)
	Share Second and Final Call A/c				Dr.			5,91,000
				To Share Capital A/c					5,91,000
	(Second and Final Call money due on 39,400 shares)
	Bank A/c				Dr.			5,79,000
				To Share Second and Final Call A/c					5,79,000
	(Second and Final Call money received except 800 shares)
	Share Capital A/c				Dr.			80,000
				To Share First Call A/c					20,000
				To Share Second & Final Call A/c					12,000
				To Share Forfeiture A/c					48,000
	(800 share forfeited)
	Bank A/c				Dr.			1,02,000
	Share Forfeiture A/c				Dr.			18,000
				To Share Capital A/c					1,20,000
	(Forfeited shares reissued 1,200 @ 85 per share)
	Share Forfeiture A/c				Dr.			48,000
			To Capital Reserve A/c						48,000
	(Profit on 1,200 reissued shares are transfer to capital reserveaccount)

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount₹	Date	Particulars	J.F.	Amount₹
	Share Application		20,00,000		Balance c/d		48,28,000
	Share Allotment		11,82,000
	Share First Call		9,65,000
	Share Final Call		5,79,000
	Share Capital		1,02,000
			48,28,000				48,28,000

Working Notes:

1. Number of shares applied by rohit

= \(\frac{\text{total number of applied shares}}{\text{total number of allotted shares}}\)×number of allotted shares

= \(\frac{50,000}{40,000}\)×600

= 750 shares

2. Call in arrears by Rohit on allotment

Money received on Application	(750×40)	=	30,000
Less: Amount adjusted on Application	(600×40)	=	24,000
Amount adjusted on Allotment			6,000

3

Money due on Allotment	(600×40)	24,000
Money adjusted		6,000
Balance due on Allotment		18,000

4. Number of shares alloted to ashmita 

= \(\frac{\text{total number of applied shares}}{\text{total number of allotted shares}}\)×number of allotted shares

= \(\frac{40,000}{50,000}\)×1000

= 800 shares

5. Profit on the forfeiture of 600 share of Rohit = ₹ 30,000

Profit on the forfeiture of 600 share of Ashmita = ₹ 36,000
\(\left( 48,000 \times \frac{600}{800} = 36,000 \right)\)

Profit on forfeiture of 1200 shares (30,000 + 36,000)		=	66,000
Less: Loss on reissue of shares		=	18,000
Transfer to Capital Reserve		=	48,000

6. Balance in Share Forfeiture Account (48,000 – 36,000) = ₹ 12,000