Shares
Meaning of Company :-
A company is an association of persons who contribute money or money’s worth to a common stock and use it for a common purpose.
Other Definitions:-
“A company is an artificial person, created by law, having separate entity withperpetual succession and a common seal”.L.H. Haney,
“A company formed and registered under the companies act. A company is an artificial person, created by law having a separate entity, with a perpetual succession and a common seal”.
Characteristics of a Company
1. Artificial person
2. Voluntary Association
3. Separate legal entity
4. Perpetual Succession
5. Limited liability
6. Common seal
7. Transferability of shares
8. Capital
9. Representative management
10. Maintenance of books
Meaning of share
The capital of a company is divided into units called shares. Share must be numbered so that they may be identified. Total capital of a company is divided into units of small denomination and units is called share and capital as a share capital.
Types of Share
(1) Equity Shares
(2) Preference Shares
Equity share:-
An equity share is a share, which is not a preference share. They are normally riskbearing shares. Dividend is paid when profits are left after the payment of fixed dividend onpreference shares. No dividend is paid when profits are not sufficient. If there are more profits,they get a higher rate of dividend.
Preference share:-
Preference share as that part of the share capital of the company which enjoys preferential rights as to:
(a) Payment of dividend at fixed rate.
(b) Return of capital on winding up of the company
(c) Right to share is excess profits when a specified dividend has been paid to equity shareholders.
(d) Rights to receive a premium at the time of redemption.
Note:- Preference shareholders have only preferential right as to the payment of dividend when
dividend is declared. They do not have any voting right.
Types of Preference share.
A. Cumulative Preference share.
B. Non-Cumulative Preference share.
C. Participating Preference share.
D. Redeemable Preference share.
Accounting for Share Capital
Issue and allotment of equity and preference share .A public company can rise in capital by issuing shares to the public. The following are the steps to be taken by a public company for the issue of shares:
steps to be taken by a public company for the issue of shares:
2. To receive applications.
3. To make allotment.
4. To make calls.
After receiving applications, the Directors take steps to allot the shares within prescribed time, in consultation with the securities and Exchange Board of India (SEBI). Allotment of shares means acceptance of after of the applicant for the purchase of shares. Directors have discretionary power either to reject or to accept partially these applications.
Types of Company Share capital
2. Issued capital
3. Subscribed capital
4. Called up capital
5. Paid up capital (-) calls in arrears (+) calls in advance
and cannot be altered.
subscription.
3. Subscribed capital: That part of issue capital which is subscribed by the public
shareholders.
5. Paid up capital: Paid up capital is that part of called up capital, which is paid by shareholders to the company.
Add one more image of notes to accounts
of Rs 10 each. Output of these the company issued 50,000 equity share of `10 each amount payable
as follows:-
Application - 3
Allotment - 3
1 st Call - 4
All money is duly received. How will you show the “Share Capital” in the Balance Sheet of the
company. Also prepare “Note to Account” for the same.
Case-II
10,000 Share are issued to Mahima Mehta for Purchase of a Building.
Case-III
A shareholders, named Atul fail to pay final call on his 500 share.
Case-IV
(Case III is not be taken into consideration)
A shareholder holding 250 share paid the entries due on allot & calls with allotment and till now final call was not made.
Case-V
A shareholder holding 200 share fail to pay allotment & on his subsequently failure to pay first his share were forfeiture after first call.
Case-VI
A shareholder holding 200 fail to payment allotment his share were forfeiture after 1 st call. Another share holder holding 300 share fail to pay 1 st call.
The company invited application for 80,000 share. Application for 75,000 share were received.
Amount payable as follows:-
Application - 2
Allotment - 3
I st call - 2
The shares are issued at a premium of 20%. Final call was not made all amount is duly received.
Case-I
A shareholder holding 200 share fail to pay allotment.
Case-II
A share holder holding 250 share fail to pay allotment & his share were forfeited after final call.
Another shareholder name ‘Atul’ fail to pay final call holding 350 share. (Final call was made).
Case-III
A shareholder holding 250 share pay the entire amount due on calls with allotment. Till now only allotment is call & received & year ends.
Case-IV
A share holder holding 500 share fail to first call & his share were forfeited after final call. Later on these share are reissued at `8 as fully paid up.
Case-V
In the previous case we just reissue only 300 share rest remain the same.
Journal Entry regarding shares
1. On receiving the application money through the Bank:
To Shares application A/c
(For application money received on ……. Shares @ Rs. …… each)
directors allot the shares, the share application money is transferred to share capital
account by passing the following entry –
(For application money transferred to Share capital a/c)
shares. With the issue of allotment letter, allotment money becomes due. The entry in this case
will be:
To Share capital a/c
(For amount due on ……. Shares @ Rs. …… per share)
4. On Receipt of allotment money:
To Share allotment A/c
(For amount received on allotment on ……. Shares @ Rs. …… each)
Entries on first call:
5. When shareholders are informed to pay the first call and it is made due:
To Share capital a/c
(For 1 st call money due on ……. Shares @ Rs. …… each)
6. On receipt of first call money:
To Share first call a/c
(For 1 st call money received on ……. Shares @ Rs. …… each)
Entries on Second Call
7. When second call is made due:
To share capital a/c
(For second call money due on ……. Shares @ Rs. …… each)
8. On Receipt of second call money:
To Share 2 nd Call a/c
(For 2 nd call money received on ……. Shares @ Rs. …… each)
Entries on Final Call
9. When Final call is made due:
To share capital a/c
(For Final call money due on ……. Shares @ Rs. …… each)
10. On Receipt of Final call money:
To Share Final Call a/c
(For Final call money received on ……. Shares @ Rs. …… each)
Issue of shares at par
Que-3 Neetu ltd. Issued 15,000 shares of Rs. 20 each. Amount payable as follows: 3,4,5,6,2. Allmoney is duly received. Pass necessary journal entries
Ans-Allotment Rs. 60,000; 1 st Call Rs. 75,000; 2 nd Call Rs. 90,000; 3 rd Call Rs. 30,000
Que-4 Manju Ltd. Issued 10,000 shares of Rs. 50 each. Amount payable as follows: 10,20,10,10. All money is duly received.Pass necessary journal entries
Ans-Allotment Rs. 2,00,000; 1 st Call Rs. 1,00,000; Final Call Rs.1,00,000
Que-5 ABC ltd. Issued 20,000 shares of Rs. 10 each. Amount payable as follows:2,3,3,2. All money is duly received except a shareholder holding 250 shares failed to pay allotment. Pass necessary journal entries
Ans-Allotment Rs. 59,250; 1 st Call Rs. 59,250; 2 nd Call Rs. 39,500
money is duly received except a shareholder holding 150 shares failed to pay 1 st call. Pass
necessary journal entries
Ans- 1 st Call Rs. 74,250; 2 nd Call Rs. 74,250.
20,30,50. All money is duly received except a shareholder holding 100 shares failed to pay
allotment and another shareholder holding 200 shares failed to pay 1 st call. Pass necessary
journal entries
Ans-Allotment Rs. 2,97,000; 1 st Call Rs. 4,85,000
Que-8 Rajan ltd. Issued 15,000 shares of Rs. 50 each. Amount payable as follows:5,10,20,5,10. All money is duly received except a the first call on 150 share and 2 nd call on 350 share . Pass necessary journal entries
Ans- 1 st Call Rs.2,97,000 ; 2 nd Call Rs. 73,250; 3 rd Call Rs 1,46,500
200,250,250,300. All money is duly received except a shareholder holding 20 shares paid
the entire amount due on calls with allotment. Pass necessary journal entries
Ans-Allotment Rs. 5,11,000; 1 st Call Rs. 4,95,000; 2 nd Call Rs. 5,94,000
20,50,20,10. All money is duly received except a shareholder holding 500 shares paid the
entire amount due on 2 nd calls with 1 st call and another shareholder holding 100 shares paid
the whole amount due on 2 nd call and 1 st call with allotment. Pass necessary journal entries
Ans-Allotment Rs. 1,03,000; 1 st Call Rs.43,000; 2 nd Call Rs. 14,000.
money is duly received except a shareholder holding 150 shares paid the entire amount due
on 2 nd call with 1 st call and another shareholder holding 400 shares failed to pay the
allotment. Pass necessary journal entries
Ans-Allotment Rs. 39,200; 1 st Call Rs. 59,100; 2 nd Call Rs. 38,900
Que-12 Sourav Ltd. Issued Rs 1,00,000 shares of Rs. 10 each. Amount payable as follows: 4,3,2,1. All money is duly received except a shareholder holding 130 shares failed to pay the 1 st call. Another shareholder holding 390 shares pay the entire amount due on calls and allotment with application. Pass necessary journal entries
Ans-Application.42,340; Allotment Rs.28,830 ; 1 st Call Rs. 18,960; 2 nd Call Rs.9,480
Que:-13 ABC ltd issued 15,000 share of Rs 10 each . Amount payable as follows :-3,2,3,2 All money is duly received except a share holder holding 500 share fail to pay allotment but when first call is call he paid the amount of allotment with first call . Pass necessary journal entries
Issue of share at premium
Que-14 Rohit ltd. Issued 15,000 shares of Rs. 10 each. Amount payable as follows:
Application 3 (2+1)
Allotment 3 (2+1)
1 st Call 3 (2+1)
2 nd Call 3 (2+1)
3 rd Call 3 (2+1)
The shares are issued at a premium of Rs. 5 per share one with each application,
allotment……. All money is duly received. Pass necessary journal entries
Ans-Allotment Rs. 45,000; 1 st Call Rs. 45,000; 2 nd Call Rs. 45,000; 3 rd Call Rs 45,000.
Application 3 (2+1)
Allotment 3 (2+1)
1 st Call 2 (1+1)
2 nd Call 5
The shares were issued at a premium of Rs. 3. All the money is duly received except a
shareholder holding 200 shares failed to pay the allotment. Pass necessary journal entries
Ans-Allotment Rs.29,400 ; 1 st Call Rs. 19,600; 2 nd Call Rs. 49,000 .
Que-16 P ltd. Issued 25,000 shares of Rs. 10 each. Amount payable as follows: 3,3,3,3. The shares are issued at a premium of Rs. 2 per share. All money is duly received except a shareholder holding 200 shares failed to pay allotment and another shareholder holding 150 shares failed to pay 1 st call. Pass necessary journal entries
Ans-Allotment Rs. 74,400; 1 st Call Rs. 73,950; 2 nd Call Rs. 73,950
Que-17 Sagar Ltd. Issued 25,000 shares of Rs. 10 each. Amount payable as follows: 4,4,4. The shares are issued at a premium of Rs. 2 per share on application. All money is duly received except a shareholder holding 120 shares failed to pay the allotment and another shareholder holding 240 shares failed to pay the 1 st call. Pass necessary journal entries
Ans-Allotment Rs. 99,520; 1 st Call Rs. 98,560 .
Que-18 Mohit ltd. Issued 40,000 shares of Rs. 20 each. Amount payable as follows : 5,5,5,5. The
shares are issued at a premium of Rs. 5 one with each i.e. application, allotment, 1 st call… All
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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money is duly received except a shareholder holding 150 shares failed to pay the 1 st call and
another shareholder holding 280 shares failed to pay the final call. Pass necessary journal
entries
Ans-Allotment Rs. 2,00,000 ; 1 st Call Rs. 1,99,250; 2 nd Call Rs. 1,97,850.
Que-19 Meenu ltd. Issued 2,000 shares of Rs. 10 each. Amount payable as follows: 3,5,3,1. The
shares are issued at a premium of Rs. 2 per share. All money is duly received except a
shareholder holding 150 shares paid the entire amount due on calls with allotment. Pass
necessary journal entries
Ans-Allotment Rs. 10,600; 1 st Call Rs. 5,550; 2 nd Call Rs. 1,850
Que-20 Shweta ltd. Issued 20,000 shares of Rs. 10 each. Amount payable as follows: 3,3,1,2,3. The
shares are issued at a premium of Rs. 2 on allotment. All money is duly received except a
shareholder holding 150 shares pay the entire amount due on second & final call with 1 st call.
Pass necessary journal entries
Ans-Allotment Rs. 60,000; 1 st Call Rs. 20,750; 2 nd Call Rs. 39,700; 3 rd Call Rs59,550 .
Que-21 Bhawna ltd. Issued 5,000 shares of Rs. 15 each. Amount payable as follows: 5,4,3,2,3. The
shares are issued at a premium of Rs. 2 on 1 st call. All money is duly received except a
shareholder holding 300 shares failed to pay the 1 st call. Another shareholder holding 500
shares pay the entire amount due on calls with allotment. Pass necessary journal entries
Ans-Allotment Rs.24,000 ; 1 st Call Rs. 12,600; 2 nd Call Rs. 8,400; 3 rd Call Rs12,600 .
Que:-22 ABC ltd issued 15,000 share of Rs 10 each issued at premium of 2 Rs . Amount payable as
follows :-3,2,3,2 All money is duly received except a share holder holding 500 share fail to
pay first call but when second call is call he paid the amount of first call with second call .
Pass necessary journal entries
Interest on Call in arrear
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que-23 X Co. ltd. issued 50,000 shares of Rs. 10 each. Payment on these shares is to be made
in the following manner:
On application Rs. 3 (1 st Jan. 2002)
On allotment Rs. 5 (1 st March 2002),
On 1 st and Final call Rs. 2 (1 st June 2002)
R, to whom 500 shares were allotted, failed to pay the 1 st and final call money on the due
date. However, he paid unpaid calls money on 1 st August 2002 with the interest at 5 per
cent p.a. Pass necessary journal entries.
Ans-Allotment Rs. 2,50,000; 1 st Call Rs. 99,000; Interest on Calls in arrear-8.33
Que-24 A ltd. Company issued to the public 500 equity shares of Rs. 100 each on the following
terms;
On application Rs. 30 (1 st February 2004); on allotment Rs. 30 (1 st April 2004); on 1 st call Rs.
20 (1 st September 2004) and final call Rs. 20 (1 st November 2004). All the shares were
applied for and allotted. All money was received except in the case of a shareholder of 10
shares who failed to pay the two calls. Interest is adjusted on 31 st December @ 5% p.a. give
journal entries in the books of the company and prepared the balance sheet.
Ans-Allotment Rs. 15,000; 1 st call Rs. 9,800;
final call Rs. 9,800; amount of interest Rs. 5.00
Interest on Call in advance
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que-25 Chandra ltd. Issued 40,000 shares of Rs. 10 each payable as follows:
Rs. 2.50 on application payable on 1 st February 1993
Rs. 2.50 on allotment payable on 1 st April 1993
Rs. 2 on first call payable on 1 st July 1993
Rs. 3 on second call payable on 1 st November 1993
All these shares were subscribed and amounts received. Mohan who had 800 shares, paid
the amount of first and second calls with allotment.
The interest was paid to Mohan on 1 st November 1993
Pass journal entries in the books of the company.
Ans-Allotment Rs. 1,04,000; 1 st Call Rs. 78,400; Final Call Rs. 1,17,600;
Interest on calls in advance-108
Que-26 Modern ltd. Issued 10,000 shares of Rs. 10 each payable as follows:
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Rs. 2.50 on application payable on 1 st Feb. 1993
Rs. 2.50 on allotment payable on 1 st April 1993
Rs. 2 on first call payable on 1 st July 1993
Rs. 3 on second call payable on 1 st November 1993
All these shares were subscribed and amounts received.
Shareholder ‘A’ who had 200 shares, paid the amount of first and second calls with
allotment.
Shareholder ‘B’ who had 500 shares, paid the amount of second call with the first call.
According to the Articles of Association, interest at the rate of 5 per cent per annum is
payable on calls in advance. The interest was paid on 1 st November 1993.
Pass necessary journal entries in the books of company.
Ans-Allotment Rs. 26,000; 1 st call Rs. 21,100;
2 nd Call Rs. 27,900; Amount of interest-47.50
Under subscription
Que-27 On January 1, 1997 Rainbow co. issued a prospectus offering 2,000 shares of Rs. 100
each to the public. The shares were payable as under:
On application Rs. 20; on allotment Rs. 30; on 1 st call Rs. 30; second call Rs. 20.
Applications were received for 1,600 shares. A shareholder holding 200 shares failed to pay
first & Final call. Pass necessary journal entries
Ans-Allotment Rs. 48,000; 1 st call Rs. 42,000; 2 nd Call Rs. 28,000
Que-28 Bee ltd. having a nominal capital of Rs. 20, 00,000 in shares of Rs. 100 each invited
application for 10,000 shares, payable as follows:
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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On application Rs. 25
On allotment Rs. 35
On first call Rs. 20
On second and final call Rs. 20
The company received application for 9,000 shares. All the applications were accepted. All
money due as stated above were received with the exception of the second and final call on
200 shares.
Record the entries relating to above-mentioned matters in the journal of the company and
show the Balance sheet of the company as finally emerging.
Ans- Allotment Rs. 3,15,000; 1 st Call Rs. 1,80,000;
2 nd & Final call Rs. 1,76,000
Forfeiture of share which are issued at par
Que-29 X Ltd. Issued 2000, equity shares of Rs. 10 each at par payable as under: On application Rs.
2 per share, on allotment Rs. 3 per share, on first call Rs. 3 per share, on second call Rs. 2 per
share. Mr. X was allotted 40 shares. Give the necessary journal entries relating to the
forfeiture of shares in each of the following alternative cases:
Case-I – If Mr. X failed to pay allotment and his shares were forfeited after
Allotment.
Case-II – If Mr. X failed to pay allotment money and on his subsequent failure to
pay the first call, his shares were forfeited after 1 st call.
Case-III – If Mr. X failed to pay the first call and his subsequent failure to the final call; the
shares were forfeited after 2 nd or final call.
Pass necessary journal entries
Ans-Balance of Share forfeiture-(I) 80; (II) 80; (III) 200
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que-30 Cee ltd. Forfeited 120 shares of Rs. 10 each for non-payment of an allotment money, of Rs.
3 per share, first call of Rs. 3 per share, final call of Rs. 2 per share. Pass necessary journal
entries
Ans-Balance of Share forfeiture-240
Que-31 Dee ltd. Forfeited 160 shares of Rs.10 on which holder has paid only the application money
of Rs. 2 per share. Pass necessary journal entries
Ans-Balance of Share forfeiture-320
Que-32 Rajesh Co. ltd. Forfeited 200 shares of Rs. 10 each (Rs. 8 called up) on which the holder had
paid application and allotment money of Rs. 5 per share. Pass necessary journal entries
Ans-Balance of Share forfeiture-1,000
Que-33 The directors of GP ltd. Forfeited 300 shares of Rs. 10 each, on which first call of Rs. 3 per
share was not received, the second and final call of Rs. 2 per share not yet been called. Pass
necessary journal entries
Ans-Balance of Share forfeiture-1,500
Que-34 The manager of Y ltd. Resolved that 1000 equity shares of Rs. 10 each, Rs. 7.50 called up be
forfeited for non-payment of first call of Rs. 250. Pass necessary journal entries
Ans-Share forfeiture Rs. 5,000
Que-35 M ltd. Forfeited 2,000 equity shares of Rs. 10 each for non-payment of allot of Rs. 2, 1 st call
of Rs. 2, 2 nd call of Rs. 2 and final call of Rs. 2. Pass journal entries.
Ans-Share forfeiture Rs. 4,000
Que-36 A holder have 500 shares. He had paid Rs. 3 on application, Rs. 2 on allotment but he
could not pay the amount of first call of Rs. 2 per share, final call of Rs. 3 is not yet due. His
shares were forfeited. Give journal entries.
Ans-Share forfeiture Rs. 2,500
Que-37 X ltd. Has 200 equity shares of Jai ltd. He had paid Rs. 2 on application, Rs. 4 on allotment,
but failed to pay the first call of Rs. 3. Final call is not yet due. His shares were forfeited.
Journalize the transactions.
Ans-Share forfeiture Rs. 1,200
Que-38 Lampa Pvt. Ltd. Issued 4,000 equity shares of Rs. 10 each payable as Rs. 3 on application,
Rs. 4 on allotment, Rs. 1 on first call on Rs. 2 on final call. Yadav, who holds 150 shares could
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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not pay allotment and first call money. His shares were forfeited subsequently. Then final
call was made. Pass necessary journal entries
Ans-Share forfeiture Rs. 450
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Forfeiture of share which are originally issued at premium and
premium is received.
Que-39 A ltd. Forfeited 1,000 shares of Rs. 10 each, issued at a premium of Rs. 4 per share payable
with the allotment money for non payment of first call of Rs. 2 per share, final call of Rs. 3 is
yet to be made. Give journal entries.
Ans-Balance of Share forfeiture-5,000
Que-40 X ltd. Forfeited 40 shares of Rs. 10 each issued at a premium of Rs. 2 per share. The shares
were forfeited after final call for non payment of first call of Rs. 2 and final call of Rs. 3. Pass
necessary journal entries
Ans-Balance of Share forfeiture-200
Que-41 Z ltd. Forfeited 1,000 shares of Rs. 10 issued at a premium of Rs. 4 per share payable with
allotment money for non payment of first call of Rs. 2 per share, final call of Rs. 3 is yet to be
made. Give journal entries.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Ans-Balance of Share forfeiture-5,000
Que-42 PQR ltd. Forfeited 400 shares of Rs. 100 each, issued at 20% premium (to be paid at the
time of allotment) for non-payment of a first call of Rs. 30 per share. The second call and
final call of Rs. 20 has not yet been made. Pass necessary journal entries
Ans-Balance of Share forfeiture-20,000
Que-43 ABC ltd. Forfeited 800 shares of Rs. 100 each (Rs. 70 called up) issued at a premium of 30%
(to be paid at time of allotment) for non payment of first call of Rs. 20 per share. Pass
necessary journal entries
Ans-Share Forfeiture Rs. 40,000
Que-44 Three shares of Rs. 100 each issued at a premium of Rs. 10 on which Rs. 80 (including
premium) was called up and Rs. 60 including premium was paid, has been forfeited. Pass
necessary journal entries
Ans-Share Forfeiture Rs. 150
Que-45 Mr. Rahim, who has 50 shares of Rs. 10 each issued at a premium of Rs. 2 per share, has
paid Rs. 2 on application, Rs. 5 on allotment including premium but could not pay the
balance on first and final call. The directors forfeited the shares. Make journal entries.
Ans-Share Forfeiture Rs. 250
Que-46 A company forfeited 100 shares of Rs. 100 each issued at a premium of 50% (to be paid at
the time of allotment) on which first call of Rs. 30 was not received, the final call money of
Rs. 20 is yet to be called. Give journal entries.
Ans-Share Forfeiture Rs. 5,000
Que-47 A company forfeited 100 shares of Rs. 10 each, on which B, the shareholder failed to pay
allotment of Rs. 5 per share including a premium of Rs. 2 per share and final call of Rs. 3 per
share. Pass journal entries.
Ans-Share Forfeiture Rs. 400
Que-48 M ltd. Forfeited 2000 equity shares of Rs. 10 each, issued at a premium of Rs. 5 per share,
for non-payment of final call of Rs. 3 per share. Give journal entries.
Ans-Share Forfeiture Rs. 14,000
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Forfeiture of share which are originally issued at premium and
Premium is not received
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que-49 Rama ltd. Issued 9000 shares of Rs. 100 each at Rs. 110 per share. The amount was
payable as follows: Rs. 50 on allotment, Rs. 30 on application, Rs. 20 on first call, Rs. 10 on
second and final call. Rai, a holder of 850 shares failed to pay the allotment money and his
shares were forfeited. Pass journal entries of forfeiture of these shares.
Ans-Balance of Share forfeiture-25,500
Que-50 X ltd. Forfeited 40 shares of Rs. 10 each of Mr. X for non-payment of allotment of Rs. 5
(including premium of Rs. 2) and first call of Rs. 2 and final call of Rs. 2. On his failure to pay
final call, his shares were forfeited. The shares were issued at a premium of Rs. 2. Pass
necessary journal entries
Ans-Balance of Share forfeiture-120
Que-51 Z ltd. Forfeited 200 shares of Rs. 100 each, issued at 10% premium for non payment of
allotment money of Rs. 50 per share (including premium), first call fo Rs. 40 per share and a
second and final call of Rs. 10 per share. Pass necessary journal entries
Ans-Balance of Share forfeiture-2,000
Que-52 AX ltd. Forfeited 1600 shares of Rs. 100 each, issued at a premium of 10% to Mr. R on
which he had paid application money of Rs. 50 per share and not paid allotment money of
Rs. 50 per share (including premium) and first call of Rs. 10 per share . Pass necessary journal
entries
Ans-Balance of Share forfeiture-80,000
Que-53 Mukesh ltd. Issued 1,000 shares of Rs. 10 each at Rs. 12 per share. The amount was
payable as under:
Rs. 1 on application, Rs. 5 on allotment (including premium), Rs. 3 on 1 st call and Rs. 3 on
final call.
The company did not make the final call, Mohan, holder of 25 shares, failed to pay allotment
and first call money. Director forfeited his shares.
Give journal entries.
Ans-Share Forfeiture Rs. 25
Que-54 Mr. Ram, who has 100 shares of Rs. 10 each issued at Rs. 12, has paid Rs. 3 on application
but fails to pay Rs. 5 on allotment including premium first and final call of Rs. 4. The director
forfeited his shares, make journal entries.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Ans-Share Forfeiture Rs. 300
Que-55 Mr. Neeraj who has 50 shares of Rs. 10 each issued at a premium of Rs. 2 per share has
paid Rs. 4 on application, but he has failed to pay the balance of Rs. 5 on allotment including
premium and Rs. 3 on first and final call. The director forfeited his shares. Make journal
entries.
Ans-Share Forfeiture Rs. 200
Que-56 Gupta publication ltd. Issued 10,000 shares of Rs. 20 each at a premium of 10% payable as
under:
On application Rs. 5
On allotment Rs. 10 (including premium)
On 1 st call Rs. 3
On final call Rs. 4.
They received all the money with the exception of allotment, first call and final call on 50
shares. Make journal entries regarding forfeiture.
Ans-Share Forfeiture Rs. 250
Que-57 50 shares of Rs. 10 each issued at a premium of Rs. 5 each payable with allotment were
forfeited for the non payment of allotment money of Rs. 9 per share including premium.
The first and final call of Rs. 3 per share were not made. Pass journal entries regarding
forfeiture.
Ans-Share Forfeiture Rs. 150
Que-58 A company forfeited 100 shares of Rs. 10 each (Rs. 8 called up) issued at a premium of 2
per share to Mr. P for non payment of allotment money of Rs. 5 per share (including
premium). Journalize.
Ans-Share Forfeiture Rs. 500
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 24 -
Re-issue of Shares
While Re-issue of shares, we have to consider about a base, that can be the par value fully
paid), called up & paid up.
For Par Value the following statement is written:
1. Re-issued as Rs. 6 as fully paid {Fully paid means Par Value}
For called up the following statement is written:
1. Re-issued at Rs. 6 {If nothing is mentioned about the base, then
we take called up value}
For paid up the following statement is written:
1. Re-issued at Rs. 6 as 9 paid up {Here the base 9 is mentioned in the
question}
Which are originally issued at par/Premium
Que-59 ABC Ltd. Forfeited 180 shares of Rs. 10 each, for non payment of allotment of Rs. 2, first
call of Rs. 3 and final call of Rs. 3 is yet to be made. These shares are reissued in the
following ways:
Ans
Date Particulars LF Dr.
Rs.
Cr.
Rs.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 25 -
1. 20 shares are reissued at Rs. 8 as fully paid
Or
20 Share are issued for Rs 120 as fully paid
Date Particulars LF Dr.
Rs.
Cr.
Rs.
2. 20 shares are reissued at Rs. 10 as fully paid
Or
20 Share are issued for Rs 200 as fully paid
Date Particulars LF Dr.
Rs.
Cr.
Rs.
3. 20 shares are reissued at Rs. 12 as fully paid
Or
20 Share are issued for Rs 240 as fully paid
Date Particulars LF Dr.
Rs.
Cr.
Rs.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 26 -
4. 20 shares are reissued at Rs. 8 as 9 paid up.
Or
20 Share are issued for Rs 160 as 9 paid up
Date Particulars LF Dr.
Rs.
Cr.
Rs.
5. 20 shares are reissued at Rs. 6 as 6 paid up.
Or
20 Share are issued for Rs 120 as 6 paid up
Date Particulars LF Dr.
Rs.
Cr.
Rs.
6. 20 shares are reissued at Rs. 12 as 8 paid up.
Or
20 Share are issued for Rs 240 as 8 paid up
Date Particulars LF Dr.
Rs.
Cr.
Rs.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 27 -
7. 20 shares are reissued at Rs. 6
Or
20 Share are issued for Rs 120 in total
Date Particulars LF Dr.
Rs.
Cr.
Rs.
8. 20 shares are reissued at Rs. 7
Or
20 Share are issued for Rs 140 in total
Date Particulars LF Dr.
Rs.
Cr.
Rs.
9. 20 shares are reissued at Rs. 9
Or
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 28 -
20 Share are issued for Rs 180 in Total
Date Particulars LF Dr.
Rs.
Cr.
Rs.
10. 20 shares are reissued at a discount of Rs 2
Date Particulars LF Dr.
Rs.
Cr.
Rs.
11. 20 shares are issued at a loss of Rs 2
Date Particulars LF Dr.
Rs.
Cr.
Rs.
When all the forfeited shares are re-issued
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 29 -
Que-60 Mahesh Trading Company forfeited 100 shares of Rs. 10 each on which application of Rs. 3
and allotment of Rs. 3 per share was paid. The first call money of Rs. 2 per share remained
unpaid. The company reissues all the forfeited shares @ Rs. 5 per share, Rs. 8 paid up. Give
journal entries.
Ans-Amount of Capital Reserve-300
Que-61 Raman ltd. Forfeited 200 shares of Rs. 10 each on which Rs. 5 per share was received. Pass
entries regarding forfeiture and reissue of all the shares if:
a. Shares are reissued at Rs. 8 per share fully paid up.
b. Shares are reissued at Rs. 7, Rs. 8 called up.
c. Shares are reissued at Rs. 4.50, Rs. 7 called up.
Pass necessary journal entries
Ans-Amount of Capital Reserve-(a) 600; (b) 800; (c) 500
Que-62 50 shares of Rs. 10 each issued at a premium of Rs. 5 each payable with allotment were
forfeited for the non-payment of allotment money of Rs. 9 per share including premium.
The first and final call of these shares at Rs. 3 per share was not made. The forfeited shares
were reissued @ Rs. 12 per share fully paid up. Pass necessary journal entries
Ans-Amount of Capital Reserve-150
Que-63 A company ltd. Forfeited 100 equity shares of the face value of Rs. 10 each, Rs. 6 per share
called up for non-payment of first call of Rs. 2 per share. The forfeited shares were
subsequently reissued as fully paid up @ Rs. 7 each. Pass necessary journal entries
Ans-Amount of Capital Reserve-100
Que-64 Y ltd. Forfeited 1,000 shares of Rs. 10 each for non-payment of first call of Rs. 2, second
call of Rs. 3 and final call of Rs. 1 is not yet to be made. These shares were re-issued to R at a
discount of Rs. 3.50 per share. Pass necessary journal entries
Ans-Capital Reserve Rs. 500
Que-65 X ltd. Forfeited 1000 shares of Rs. 20 each issued at a premium of Rs. 2 per share to Ashok
(Rs. 18 called up) on which the allotment of Rs. 6 including premium and first call of Rs. 4 is
not paid. Give journal entries for forfeiture and re-issue in the following cases:
I. 600 shares were re-issued to R at Rs. 14 per share as Rs. 18 paid up.
II. 200 shares to S as fully paid up for Rs. 24 per share.
III. 200 shares to T as fully paid up for Rs. 10 per share at different intervals of time.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 30 -
Give journal entries.
Ans-Capital Reserve Rs. 5,600
Que-66 A ltd. Forfeited 200 shares of Rs. 10 each fully called up, held by X for non payment of
allotment money of Rs. 3 per share and final call of Rs. 4 per share. He paid the application
money of Rs. 3 per share. These shares were re-issued to Y for Rs. 8 per share. Give journal
entries
Ans-Capital Reserve Rs. 200
Que-67 A company forfeited, 100 equity shares of Rs. 100 each issued at a premium of 5% [to be
paid at the time of allotment] on which first call money of Rs. 30 per share was not received;
final call of Rs. 20 is yet to be made. These shares were subsequently re-issued at Rs. 70 per
share at Rs. 80 paid up.
Give necessary journal entries regarding forfeiture & re-issue.
Ans-Capital Reserve Rs. 4,000
Que-68 A ltd. forfeited 400 shares of Anil of Rs. 10 each fully called up for non payment of final call
of Rs. 2 per share and re-issued to Sunil as fully paid for Rs. 10 per share. Pass necessary
journal entries
Ans-Capital Reserve Rs. 3,200
Que-69 B ltd. forfeited 500 shares of Rs. 10 each fully called up for non payment of first call of Rs. 2
per share and final call of Rs. 2 per share. All the shares were re-issued as fully paid for Rs. 8
per share. Pass necessary journal entries
Ans-Capital Reserve Rs. 2,000
When Part of the forfeited shares are re-issued
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 31 -
Que-70 N ltd. Forfeited 2,000 equity shares of Rs. 10 each, issued at a premium of Rs. 5 per share,
held by Raj for non-payment of final call of Rs. 3 per share. Of these 100 shares were
reissued to Vinu at a discount of Rs. 4 per share. Pass journal entries.
Ans-Amount of Capital Reserve-300
Que-71 Vinu ltd. Forfeited 20 shares of Rs. 100 each (Rs. 60 called up) issued at par to Manu on
which he had paid Rs. 40 per share. Out of these 15 shares were reissued to Sanju as Rs. 60
paid up for Rs. 45 per share. Pass necessary journal entries
Ans-Amount of Capital Reserve-375
Que-72 150 equity shares of Rs. 10 each issued at a premium of Rs. 5 per share, held by Robin on
15 th December, 1999, for non payment of allotment money of Rs. 8 per share including
securities premium of Rs. 5 per share, the first call of Rs. 2 per share and the final call of Rs.
3 per share. Out of these 100 equity shares were re issued to Shri Bh. at Rs. 15 per share on
25 th December 1999. Pass necessary journal entries
Ans-Amount of Capital Reserve-200
Que-73 Rajiv ltd. Forfeited 12,800 shares of Rs. 100 each issued at a premium of 10%. On which he
had paid application money of Rs. 30 per share, for non-payment of allotment money of Rs.
50 per share (including premium) and first call of Rs. 30 per share. Out of these 3,200 shares
were re-issued as fully paid up for Rs. 90 per share. Journalize.
Ans-Amount of Capital Reserve-64,000
Que-74 X ltd. Forfeited 300 shares of Rs. 10 each fully called up held by R 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 re-issued to Rishi for a total payment of Rs. 2,000. Pass necessary journal
entries.
Ans-Capital Reserve Rs. 250
Que-75 B ltd. Forfeited 1,000 shares of Rs. 10 each of Rs. 7 called up, issued at a premium of 20%
(to be paid at the time of allotment) for non payment of allotment money of Rs. 4 per share
(including premium) and first call of Rs. 2 per share. Out of these, 600 shares were re-issued
as fully paid for Rs. 8.50 per share. Pass necessary journal entries
Ans-Capital Reserve Rs. 900
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 32 -
Que-76 Z ltd. Forfeited 1,000 shares of Rs. 10 each issued at 30% premium (Rs. 8 called up) on
which she did not pay Rs. 5 of allotment (including premium) and first call of Rs. 3. Out of
these, 400 shares were re-issued to Savita as Rs. 8 called up for Rs. 6 per share and 300
shares to Namita as fully paid up for Rs. 11 per share at different intervals of time. Give
journal entries.
Ans-Capital Reserve Rs. 1,300
Que-77 Karishma Kapoor ltd. Forfeited 50 shares of Rs. 100 each issued at 10% premium on which
allotment money of Rs. 30 per share including premium and first call of Rs. 30 per share
were not received, the second and final call of Rs. 20 per share was not yet called. Give
journal entries regarding forfeiture and re-issue of shares in each of the following cases:
i. If 20 of these shares were re-issued as Rs. 80 paid up for Rs. 90 per share.
ii. If 20 of these shares were re-issued as Rs. 80 paid up for Rs. 80 per share.
iii. If 20 of these shares were re-issued as Rs. 80 paid up for Rs. 70 per share.
iv. If 20 of these shares were re-issued as Rs. 80 paid up for Rs. 50 per share.
v. If 20 of these shares were re-issued at Rs. 70 per share as fully paid up.
Pass necessary journal entries
Ans-Capital Reserve i. 600; ii 600; iii 400; iv NIL; v. NIL
Que-78 A ltd. Forfeited 150 equity shares of Rs. 10 each issued at a premium of Rs. 5 per share, for
non-payment of allotment of Rs. 8 per share [including share premium Rs. 5 per share], the
first call of Rs. 2 per share and the final call of Rs. 3 per share. Out of these 100 equity
shares were re-issued at Rs. 14 per share. Give journal entries to record the forfeiture and
re-issue of shares.
Ans-Capital Reserve Rs. 200
Que:-79X ltd forfeited 300 shares of Rs 100 each (Rs 75 called up ) issued at 105 premium (to be
paid at the time of allotment ) , for non payment of allotment of Rs 30 (including premium ) &
first call of Rs 20 per share out of these 100 shares were reissued as fully paid up in such a way that
3,100 were transferred to capital reserve
Ans:-Amount of reissued is Rs 96 per share
Some Full Questions
Issued at PAR
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 33 -
Que-80 AKB Ltd. issued 10,000 shares of Rs. 10 each. Amount payable as follows: 2,3,2,3. All
money is duly received except a shareholder holding 150 shares failed to pay allotment and
his shares were forfeited after allotment. Another shareholder holding 250 shares failed to
pay 1 st call & his shares were forfeited after 1 st call. Another shareholder holding 400 shares
failed to pay 2 nd call and his shares were forfeited after 2 nd call. All of these shares are re-
issued at Rs. 8 as fully paid up. Pass necessary journal entries
Ans-Allotment Rs. 29,550; 1 st Call Rs. 19,200; 2 nd Call Rs. 27,600; Capital Reserve-2,750
Issued at PREMIUM
Que-81 ABC ltd. issued 1,00,000 shares of Rs. 10 each. Amount payable as follows: 2,3,4,2. The
shares are issued at a premium of 1 Rs. All money is duly received except a shareholder
holding 250 shares failed to pay allotment and another shareholder holding 300 shares
failed to pay final call. Both of these shares are forfeited after final call.
Afterward these shares are re-issued at Rs. 12 as fully paid. Pass necessary journal entries
Ans-Allotment Rs. 2,99,250; 1 st Call Rs. 3,99,000 ; 2 nd Call Rs. 1,98,900; Capital Reserve-2,900
Que-82 XYZ ltd. Issued 10,000 shares of Rs. 10 each, amount payable as follows: 3,4,3. All money is
duly received except a shareholder holding 150 shares failed to pay allotment & his shares
were forfeited after allotment . Another share holder holding 250 share fail to pay the first
call and his share were forfeited after first call Out of these forfeited shares 300 are
reissued at Rs. 6 as 7 paid up(all the share of the second share holder are included ). Give
journal entries and cashbook.
Ans-Allotment-39,400 ; 1 st & Final call-28,800 ; Capital Reserve Rs.1,600
Que-83 Alfa ltd. Issued 5,000 shares of Rs.100 per share at par. The amount payable as follows:
Rs. 20 on application; Rs. 30 on allotment; Rs. 20 on first call and Rs. 30 on final call.
The company did not make the final call. X a holder of 100 shares failed to pay the allotment
and Y a holder of 50 shares failed to pay 1 st call money. These shares were forfeited after 1 st
call and reissued 120 shares @ Rs. 60 as 80 paid up (whole of X shares being included). Pass
journal entries.
Ans-Allotment Rs. 1,47,000; 1 st call – 97,000; Capital Reserve Rs. 600
Que-84 Fast food ltd. Issued a prospectus offering 10,000 equity shares of Rs. 50 each as par as
follows: on application Rs. 10; on allotment Rs. 10; on 1 st call Rs. 15; on final call Rs. 15.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 34 -
Ram, a holder of 500 equity shares did not pay the amount due on allotment. These were
forfeited by Board of directors after allotment. And Anil, holding 200 shares failed to pay
the amount due on both the calls and his shares were also forfeited after final call was
made.
Out of these 350 shares were reissued at Rs. 45 per share as fully paid up. (Whole of Anil’s
share being included). Journalize.
Ans- Allotment-95,000; 1 st call -1,39,500; 2 nd Call-1,39,500; Capital Reserve Rs. 3,750
Que-85 A company makes an issue of 5,000 equity shares of Rs. 100 each. The net amount payable
is as follows: on application Rs. 25; on allotment Rs. 35; on first call Rs. 20 each; and on final
call Rs. 20.
A shareholder holding 300 shares did not pay first and final call money. His shares were
forfeited, out of these 200 shares were re-issued to Mr. Y at Rs. 70 per share. Pass journal
entries.
Ans- Allotment-1,75,000; 1 st call-94,000; 2 nd Call-94,000; Capital Reserve Rs. 6,000
Que-86 A company makes an issue of 5,000 equity shares of Rs. 100 each. The net amount is
payable as follows: On application Rs. 20; on allotment Rs. 20; on first call Rs. 25; On final
call Rs. 25.
A shareholder holding 300 shares did not pay first call and final call money. His shares were
forfeited. Out of these, 200 shares were reissued to Mr. Y at Rs. 70 per share. Prepare
Journal of the company.
Ans- Allotment -1,50,000; 1 st call-1,17,500; 2 nd Call-1,17,500; Capital Reserve Rs. 4,000
Que-87 A company makes an issue of 5,000 equity shares of Rs. 100 each. The net amount payable
as follows: on application Rs. 20; on allotment Rs. 30; on first call Rs. 25; on final call Rs. 25.
A shareholder holding 200 shares failed to pay allotment and another shareholder B, holding
100 shares failed to pay both calls. These shares were forfeited.
200 shares were reissued to Mr. Z at Rs. 70 (whole of B’s share included) per share. Pass
entries.
Ans-Allotment-96,000; 1 st call-1,17,500; 2 nd call-1,17,500; Capital Reserve-1,000
Que-88 A company issued 50,000 shares of Rs. 10 Each . Amount payable as follows: Rs. 2.50 on
application; Rs. 4 on allotment; Rs. 2 on first call and balance on final call.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 35 -
Final call was not made by the directors. One shareholder Deepak did not pay allotment on
500 shares. His shares were forfeited after allotment. Aparna a holder of 250 shares failed
to pay calls. Her shares were also forfeited.
Out of forfeited shares 600 shares were reissued at a discount of Rs. 3 (whole of Deepak’s
share being included). Give journal entries and prepare cashbook. Different from surbhi’s
book
Ans-Allotment-1,98,000; 1 st call-98,500; Capital Reserve-100
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 36 -
1. Format of Pro-Rata table
Share
applied
Share
allotted
Total
money rec.
Application
money
Allotment
money
1 st call
money
Bank or
Amount
Refunded
XXXX XXXX XXXX XXXX XXXX XXXX XXXX
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 37 -
2. Working note of allotment :-
3. How to calculate the amount of the defaulting share
holder :-
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 38 -
Question on pro rata with default & four entries
Que-89 A company offered 10,000 shares of Rs. 10 each payable as
Rs. 2 on application, Rs. 4 on allotment, Rs. 3 on 1 st call and Rs. 1 on final call.
The public applied for 15000 shares. The shares were allotted on a pro-rata basis to
the applicants of 12000 shares. Money over paid on applications was utilized towards
sums due on allotment.
All money is duly received except a shareholder holding 200 shares fail to pay
allotment .
You are required to prepare pro-rata table & pass first 4 entries
Ans-Allotment Rs.35,280
Que-90 Ruchi Ltd. issued 5000 equity shares of Rs. 10 each. Amount is payable as follows
Application -2
Allotment -5
Balance on first & final call
Applications were received for 9000 equity shares, out of which letters of
regret were issued to 2000. full allotment was made to applicants for 1000 shares.
Pro rata allotment was made on the balance. Money over paid on application was
used in allotment. All money due on allotment was received except from a
shareholder holding 100 shares to whom pro rata allotment was made.
You are required to prepare pro-rata table & pass first 4 entries with proper
working notes regarding calculation of amount of allotment
Ans-Allotment Rs.20,600
Que-91 Morten Ltd. issued 90,000 equity shares of Rs. 10 each amount payable as follows
Rs. 3 per share on application
Rs. 3 per share on allotment
Rs. 4 per share on 1 st call
The subscription list was closed on 1 st January 2003 by which date applications for
1, 20,000 shares were received. Allotment was made as follows:
List I. Applicants of 15000 shares were allotted in full.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 39 -
List II. Applicants of 45000 shares were allotted 30,000 shares on pro rata basis.
List III. Applicants of 60,000 shares were allotted 45000 shares on pro rata basis.
All the shareholders paid the amount due on allotment and call except A (who was allotted
3000 shares under List II) and B (who was allotted 4500 shares under List III). They
did not pay any money due on allotment and 1 st call.
You are required to prepare pro-rata table & pass first 4 entries with proper working
notes regarding calculation of amount of allotment
Ans-Amount received on allotment Rs. 1,66,500
Que-92 All out ltd. invited applications for 1,00,000 12% preference shares of Rs. 100 each.
The amount payable as follows:
On application Rs. 20
On allotment Rs. 30
On first and final call – balance
Applications for 1,50,000 shares were received. Applications for 20,000 shares were
rejected and pro-rata allotment was made to the remaining applicants. Money over paid
on applications was utilized towards sums due on allotment.
A shareholder applied for 130 share fail to pay allotment.
You are required to prepare pro-rata table & pass first 4 entries with proper working
notes regarding calculation of amount of allotment
.
Ans-Amount received on allotment Rs. 23,97,600
Que-93 M.P. Chemicals works ltd. issued for public subscriptions 1,00,000 equity shares of Rs. 100
each at premium of Rs. 20 per share payable as under:
On application, Rs. 20 per share; on allotment, Rs. 50 per share (including premium); on
first call Rs. 20 per share; and on final call Rs. 30 per share.
Applications were received for 1,50,000 shares. The shares were allotted pro-rata to the
applicants for 1,20,000 shares, the remaining applications being rejected. Money over
paid on applications was utilized towards sums due on allotment.
All money is duly received, except a shareholder holding 480 shares fail to pay allotment
Prepare pro-rata table & pass first 4 entry
Ans-Allotment Rs. 45,77,920
Que-94 Superstar Ltd. invited applications for 1,00,000 equity shares of Rs. 10 each. The shares
were issued at a premium of Rs. 2 per share. The amount was payable as follows:
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 40 -
On application –Rs3 per share
On allotment _ Rs 4 per share (including premium Rs. 2)
Balance on the first and final call
Applications for 1,50,000 shares were received. Applications for 10,000 shares were
rejected and pro-rata allotment was made to the remaining applications on the following
basis:
I. Applicants for 80,000 shares were allotted 60,000 shares.
II. Applicants for 60,000 shares were allotted 40,000 shares.
All money is duly received except a share holder who had applied for 400 shares under categories
(1)fail to pay allotment and another share holder to whom 400 shares were allotted fail to
pay allotment under categories( 2) . Money over paid on applications was utilized towards
sums due on allotment.
Prepare pro-rata table & pass first 4 entry
Ans-Allotment Rs.2,78,100
Que-95 Sachin Company issued a prospectus inviting applications for 4,000 equity shares of Rs. 10
each at a premium of Rs. 2 per share payable as under:
On application Rs. 2 per share
On allotment Rs. 5 per share (including premium)
On first call Rs. 3 per share
On second call Rs. 2 per share
Applications were received for 6000 shares. Allotment was made pro-rata to the applicants for
4800 shares, the remaining applications being refused. Money over paid on applications
was utilized towards sums due on allotment.
Sanjay, who applied for 96 shares was failed to pay the allotment money & call money.
You are required to prepare pro-rata table & pass first 4 entries with proper working
notes regarding calculation of amount of allotment
. Ans-Amount received on allotment Rs. 18,032
Que-96 Hit Ltd. invited applications for 10,000 shares of Rs. 100 each at 10% premium included in
the allotment money. Applications were received for 18000 shares of which applications
for 3000 shares were rejected and their money was refunded. Rests of the applicants
were issued shares on pro rata basis and their excess money was adjusted towards
allotment. The money was called as follows;
On application Rs. 20
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 41 -
On allotment Rs. 40
On first call Rs. 30
On second and final call Rs. 20
Karina, a holder of 300 shares paid only the application money,
You are required to Prepare pro-rata table & pass first 4 entries with proper working
notes regarding calculation of amount of allotment
Ans-Amount received on allotment Rs. 2,91,000
Some Question of forfeiture
with pro -rata at par
Que-97 A ltd. Forfeited 500 shares of Mr. K who had applied for 600 shares for non-payment of
allotment of Rs. 2, first call Rs. 3, & final call of Rs. 3. Par value of share being Rs. 10. These
shares were re-issued at Rs. 9 as fully paid.
Ans-Capital Reserve Rs. 700
Que-98 Vikas ltd. Forfeited shares of Mr. Deepak, who had applied for 480 (Under Pro rata for
24,000 – 20,000) for non payment of Rs. 4 on allotment & first & final call of Rs. 2 is yet to be
called. Out of these 200 shares were re-issued at Rs. 8 as 9 paid up.
Ans-Capital Reserve Rs. 760
Que-99 Chitra ltd. Forfeited 240 shares of Ruchi who had applied for 300 shares. Amount payable
as follows: 2,3,2,3. Ruchi failed to pay allotment and first call. 2 nd & final cal is yet to be
called. 100 shares are re-issued at a discount of 2.
Ans-Capital Reserve – 50
Que-100 Mohit ltd. Forfeited 300 shares of Miss. Aparna who had applied for 800 shares. Amount
payable as follows: 3,4,2,1. Miss. Aparna failed to pay 1 st call. All theses shares are re-issued
at a loss of Rs. 2. Excess amount received on application is to be adjusted on allotment and
calls .Pass journal entries .
Ans-Capital Reserve – 1,800
with pro -rata at premium
Que-101 Gaurav ltd. Forfeited 160 shares of Saurav who had applied for 200 shares. Amount
payable as follows: 3,3,4,2. The shares were issued at a premium of Rs. 2 on allotment.
Saurav failed to pay allotment and first call. 2 nd & Final call is still to be called. Out of these,
120 shares were re-issued at Rs. 9 as fully paid up.
Ans-Capital Reserve Rs. 330
Que-102 Shobha ltd. Forfeited 100 shares of Mr. Rohit who had applied for 120 shares for non
payment of allotment & first call. Amount payable as follows: 4,3,5. The shares are issued
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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at a premium of Rs. 2 per share on application. These shares are re-issued at Rs. 9 as fully
paid.
Ans-Capital Reserve Rs. 180
Que-103 ABC ltd. Forfeited 100 shares of Mr. Rohit who has applied for 200 shares. Amount
payable as follows: 5,4,3. The shares are issued at a premium of 2 Rs. One on application
and one on allotment. Mr. Rohit has paid only application money. These shares were re-
issued to Shobit at Rs. 8 as fully paid.
Ans-Capital Reserve - 600
Que-104 Lalit Co. ltd. Forfeited 240 shares of Mr. Deepak Nagar for non payment of Rs. 6 including
premium Rs. 4 on allotment & first & final call of Rs. 3 who had applied for 360 shares. Out
of this 120 shares re-issued to Mohit at Rs. 6 as 8 paid up.
Ans-Capital Reserve -660
Important Question
Que-105 Vinay ltd. Forfeited 200 shares who had applied for 240 shares for non payment of
allotment & 1 st & final call. Amount payable as follows: 5,2,3,2. The shares are issued at a
premium of Rs. 2, one on application and one on allotment. Out of these 150 shares are re-
issued at Rs. 8 as fully paid.
i. When excess amount received on allotment is treated as amount of security premium.
Ans-Capital Reserve Rs.300
ii. When excess amount received on allotment is treated as allotment money.
Ans-Capital Reserve Rs.450
PRO-RATA issued at PAR
Simple Question –single default
Que-106 Nav lakshmi ltd. Issued a prospectus inviting applications for 50,000 shares of Rs. 10 each.
These shares were issued at par on the following terms:
On application Rs. 3; on allotment Rs. 4; on first call Rs. 2; on final call the balance.
Applications were received for 60,000 shares.
Allotment was made on the following basis:
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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1. To applicants for 10,000 shares in full
2. To applicants for 20,000 shares – 15,000 shares
3. To applicants for 30,000 shares – 25,000 shares
All excess amount paid on application is to be adjusted against amount due on allotment.
The shares were fully called and paid up except amounts of allotment, first and final call not
paid by those who applied for 2,000 shares out of the group applying for 20,000 shares.
All the shares on which calls were not paid were forfeited by the Board of Directors. 1,000
forfeited shares were re-issued as fully paid on receipt of Rs. 8 per share. Show the journal
entries in the books of Nav Lakshmi ltd.
Ans-Amount received on allotment-1,65,500; 1 st Call-97,000; 2 nd Call-48,500; Capital
Reserve Rs. 2,000
Simple Question –single default
Que-107 Kaurve Co. ltd issues for public subscription 70,000 shares of Rs. 10 each .The
company called the amount per share as under:
On application Rs. 2, on allotment Rs. 3, on first call Rs. 3 and on final call Rs. 2.
1,15,000 applications were received. Shares were allotted as under:
1) To refuse allotment to applicants for 30,000 shares.
2) To give full allotment to applicants for 10,000 shares.
3) To allot the remaining shares pro rata among other applicants.
Money overpaid on applications was employed on account of sums due on allotment.
Shri Manoj who was allotted 2,400 shares at pro rata did not pay allotment and first call
money. The managing director Shri Narad forfeited the shares of Shri Manoj after asking the
first call money and re-issued them to Shri Karam for Rs. 8.80 per share as fully paid.
Pass necessary journal entries.
Ans-Amount received on allotment-1,74,000 ; 1 st Call-2,02,800; Capital Reserve Rs. 3,120
Double default
Que-108 X ltd. Invited applications for issuing 2,00,000 equity shares of Rs. 10 each. The
amount was payable as follows:
On application Rs. 5
On allotment Rs. 2
On first and final call Rs. 3
Applications for 4,00,000 shares were received and allotment was made as follows:
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Category Shares applied Shares allotted
I 50,000 40,000
II 1,00,000 30,000
III 2,50,000 1,30,000
All the shares were allotted on pro rata basis and excess application money was adjusted towards
sums due on allotment only .
Madhu, who belonged to category I and to whom 600 shares were allotted failed to pay the
allotment money. Her shares were forfeited immediately after allotment money was not
received.
Pooja, who belonged to category III and who had applied for 250 shares failed to pay the final call.
Her shares were forfeited after final call. The forfeited shares were re-issued @ Rs. 9 per
share fully paid up.
Pass necessary journal entries in the books of X ltd.
Ans-Amount received on allotment-29,550; 1 st Call-5,97,810 ; Capital Reserve Rs:-3,930
CASE :-B What happen if excess amount received on application is to be adjusted on allotment
and calls
Ans-Amount received on allotment-29,550; 1 st Call-1,68,150 ; Capital Reserve Rs:-4,270
Double default
Que-109 Ravan Ltd. invited applications for issuing 2,00,000 equity shares of Rs. 10 each. The
amount was payable as follows:
On application Rs. 2
On allotment Rs. 5
On first and final call Rs. 3
Applications for 4,00,000 shares were received and the allotment was made as follows:
Category Shares Applied Shares allotted
I 50,000 80%
II 1,00,000 30%
III 2,50,000 52%
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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All the shares were allotted on pro rata basis and excess application money was adjusted
towards sums due on allotment.
Ram who belonged to category 1 and to whom 600 shares were allotted failed to pay the allotment
money. His shares were forfeited immediately after allotment money was not received.
Vibhishan who belonged to category III and who had applied for 250 shares failed to pay the
final call. His shares were forfeited after the final call. The forfeited shares were reissued @
Rs. 9 per share fully paid up.
Required-Pass necessary journal entries in the books of Ravan Ltd.
EXCESS AMOUNT TO BE ADJUSTED OA ALLOTMENT AND CALLS
Que:-110 Gupta Ltd. Issued 10,000 shares of `10 each payable as follows:
2.50 on application
4.00 on allotment
3.50 on 1st Call
Subscription list was closed on 1-4-1996 by which date applications for 23,000 shares were
received. Allotment was made as follows:
List I - Applicants for 2,000 shares were allotted in full.
List II - Applicants for 6,000 shares were allotted 3,000 shares on pro-rata basis.
List III - Applicants for 15,000 shares were allotted only 5,000 shares on pro-rata basis.
Excess money received on application was utilised towards allotment and call.
All the shareholders paid the amounts due on allotted and call except A (who was allotted 300
shares under list II) and B (who was allotted 500 shares under list III). Both of these
shareholders paid only the application money.
Their shares were duly forfeited and were re-issued at `8 per share fully paid.
Pass the necessary journal entries.
Ans-Amount received on allotment-12,050; 1 st Call-27,700 ; Capital Reserve Rs:-3,650
Combine Application and Allotment
Que-111 Verma Ltd. invited applications for 1,00,000 equity shares of Rs. 10 each. The amount
was payable as follows:
1) On application and allotment Rs. 6 per share
2) Balance on the first and final call.
Applications for 1,50,000 shares were received. applications for 10,000 shares were
rejected and pro-rata allotment was made to the remaining applicants on the following
basis:
1) Applications for 80,000 shares were allotted 60,000 shares.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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2) Applications for 60,000 shares were allotted 40,000 shares.
X, who belonged to the first category and was allotted 300 shares, failed to pay the first call
money. Y who belonged to the second category and was allotted 200 shares, failed to pay the first
call money, their shares were forfeited. The forfeited shares were re-issued @ Rs. 12 per share
fully paid up.
Required – Prepare cash book and pass necessary journal entries.
Ans-Amount received on first and final call -1,59,200; Capital Reserve Rs:-4,200
Important Question
Que:- 112 Zee limited was registered with the Capital of Rs 20,00,000 , divided into 80,000 shares
of Rs 25 each . the Company offer for subscription 40,000 shares payable Rs 7.50 on
application , Rs 7.5 per share on allotment and the balance in two calls of equal amounts
.the company received application for 46,400 shares application for 4,000 shares were
rejected together and the application money was return to the applications .A person who
applied for 4,000 shares was allotted only 1,600 shares and the excess of the application
amount was carried forward toward the payment of allotment and calls .
Make journal entries to record the above issue of shares .
Amount received on allotment Rs 2,88,000 ; on 1st calls :-1,94,000;on final call Rs 2,00,000.
Pro-rata- issue of shares at Premium
Single default
Que-113 D Ltd. Offered to the pubic 20,000 shares of Rs. 100 each at a premium of Rs. 20 per share
payable as follows:
Rs.
On application 20
On allotment 50 (including premium)
On first call 25 and
On final call 25
Applications were received for 36,000 shares out of which those for 10,000 shares were
rejected outright; full allotment was made to the applicants for 6,000 shares and pro rata
allotment was made to balance.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 47 -
Final call was not made and a shareholder holding 700 shares to whom allotment was made
on pro rata basis failed to pay the allotment and first call money. His shares were forfeited.
Out of these, 350 shares were re-issued at Rs. 70 per share as Rs. 75 paid up.
Pass journal entries
Ans- Allotment Rs. 8,51,000; 1 st Call Rs. 4,82,500; Capital Reserve Rs. 8,250
Single default
Que-114 The Delhi Cloth Mills ltd. Invited applications for 10,000 shares of Rs. 100 each at a
premium of Rs. 10 each payable as below:
Rs. 50 on application
Rs. 35 on allotment (including premium)
Rs. 25 on call
Applications for 15,000 shares were received. Applicants for 2,500 shares did not get any
allotment and their money returned. Allotment was made pro rata to the remaining
applicants.
Mr. A was allotted 400 shares. He failed to pay the amount due on allotment and call
money. The company forfeited his shares and subsequently re-issued at Rs. 105 per share.
Show the journal and cash book entries in the books of the company and also prepare the
Balance sheet.
Ans-Amount received on allotment-2,16,000; 1 st Call-2,40,000 ; Capital Reserve Rs:25,000
Single default
Que-115 A company offered 10,000 shares of Rs. 10 each issued at a premium of 20 % payable as
Rs. 2+2 on application(including premium), Rs. 3 on allotment, Rs. 3 on 1st call and Rs. 2 on
final call.The public applied for 15000 shares. The shares were allotted on a pro-rata basis to
the applicants of 12000 shares. All shareholders paid the allotment money excepting one
shareholder who was allotted 200 shares. These shares are forfeited. The first call was
made thereafter. The forfeited shares were reissued @ 9 per share Rs. 8 paid up. The final
call was not yet made.
You are required to prepare the cash book and pass journal entries.
Ans-Amount received on allotment-21,560 ; 1 st Call-29,400 ; Capital Reserve Rs:-560
Double default
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que-116 Ashish ltd. Invited applications for 80,000 shares of Rs. 10 each at a premium of Rs. 2.50
per share payable as follows:
On application Rs. 3; on allotment Rs. 4.50 (including premium); on first call Rs. 2; on second
call Rs. 3.
Application were received for 1,70,000 shares. Out of which applications for 10,000 shares
were rejected and money refunded to them. The allotment was made pro rata to the
remaining applicants. Money over paid on application was used against allotment money
due.
Anil to whom 2,000 shares were allotted failed to pay the allotment money, and on
his subsequent failure to pay the first call, his shares were forfeited.
Sunil, the holder of 1,200 shares failed to pay the two calls, and his shares were
forfeited after the final call. Of the forfeited shares 2,400 shares were re-issued at the rate
of Rs. 8 per share credited as fully paid, including the whole of the Anil’s share forfeited.
Show the necessary journal entries and prepare Balance sheet.
Ans- Ans-Amount received on allotment-1,17,000; 1 st Call-1,53,600 ; 2 nd call:- 2,30,400
Capital Reserve Rs:-4,200
Double default
Que-117 A ltd. Company issued a prospectus inviting applications for 2,00,000 shares of Rs. 10 each
at a premium of Rs. 2 per share payable as follows: on application Rs. 3; on allotment Rs. 4
(including premium); on first call Rs. 3 and on second call Rs. 2.
Applications were received for 3, 00,000 shares and allotment was made on pro rata basis.
Money overpaid on applications was employed on account of sums due on allotment.
R, to whom 400 shares were allotted failed to pay the allotment money and on his
subsequent failure to pay the first call his shares were forfeited.
M, the holder of 600 shares failed to pay the two calls and his shares were forfeited after
the second call. Of the shares forfeited, 800 shares were sold to K as fully paid, k paying Rs.
9 per share, the whole of R’s share being included.
Give journal entries; prepare Bank a/c and Balance sheet.
Ans-Amount received on allotment-4,99,000; 1 st Call-5,97,000 ; 2 nd call :-3,98,000
DOUBLE PREMIUM
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que:-118 Vinod Paper Ltd. Invited applications for issuing 1,00,000 shares of `10 each at a
premium of `4 per share payable as follows:
On Application `4 including premium `2)
On Allotment `4 (including premium `2)
On First & Final Call `6
Applications were received for 1,30,000 shares and pro-rata allotment was made to all applications
as follows:
Applicants for 80,000 shares were allotted 60,000 shares, and
Applicants for 50,000 shares were allotted 40,000 shares.
X, who belonged to the first category and was allotted 900 shares failed to pay the allotment and
call money.
Y, who belonged to the second category and who allotted for 1,000 shares also failed to pay the
allotment and call money. Their shares were forfeited and 1,400 of the forfeited shares were
re-issued @ `9 per share as fully paid. Re-issued shares included whole of Y’s shares.
Prepare Cash Book, journal entries and an opening Balance Sheet.
Ans-Amount received on allotment-2,74,000; 1 st Call-5,88,600 ; Capital Reserve Rs:-2,933
PREMIUM IN ALL
Que:-119 Ganesh Ltd. Issued a prospectus inviting applications for 20,000 shares of `10 each at a
premium of `4 per share, payable as follows:
On Application `4 (including premium `1)
On Allotment `3 (including premium `1)
On First Call `3 (including premium `1)
On Second and Final Call `4 (including premium `1)
Applications were received for 30,000 shares and pro-rata allotment was made on the applications
for 24,000 shares. It was decided to utilise excess application money towards the sums due
on allotment.
X, who was allotted 500 shares, failed to pay the allotment money and on his subsequent failure to
pay the first call, his share were forfeited.
Y, who applied for 1,800 shares, failed to pay the two calls and his shares were forfeited after the
second call.
Of the shares forfeited 1,700 shares were re-issued as fully paid up for `8 per share, the whole of Y,
shares being included.
Prepare Cash Book, Journal and Balance Sheet.
Ans-Amount received on allotment-42,900; 1 st Call-54,000 ; 2 nd call 72,000 :- Capital
Reserve Rs:-4,860
COMBINE APPLICATION AND ALLOTMENT WITH DOUBLE PREMIUM
Que:-120 X Ltd. Invited applications for 4, 00,000 shares of `10 each. The shares were issued at
a premium of `7 per share. The amount was payable as follows:
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 50 -
On application & allotment : `9 per share (including premium `4)
On First & Final Call : The balance amount (including premium)
Applications were received for 5,70,000 shares and the allotment was made as under:
1) To applicants for 3,50,000 shares : 2,50,000 shares on pro-rata basis.
2) To applicants for 2,00,000 shares : 1,50,000 shares on pro-rata basis.
3) To applicants for 20,000 shares : NIL
A, who belonged to the first category and was allotted 500 shares, failed to pay the first call money.
B, who belonged to the second category and was allotted 300 shares also failed to pay the
first call money. Their shares were forfeited and were re-issued @ `15 per share fully paid-
up.
Pass necessary Cash-Book and Journal entries.
Ans-Amount received on 1 st Call-18,47,650 ; Capital Reserve Rs:-4,540
Important Question
Que-121 Om Ltd. Issued a prospectus offering 2,00,000 equity shares of Rs. 10 each at a premium
of Rs. 2 per share, payable as follows:
On application Rs. 2.50 per share.
On allotment Rs. 4.50 per share (including premium)
On first call (Three months from allotment) Rs. 2.50 per share
On second call (Three months after call) Rs. 2.50 per share.
Subscriptions were received for 3,17,000 shares on April 23, 2002 and
the allotment made on April 30, was as under:
1) Allotment in full (two applicants paid in full on allotment
in respect of 4000 shares each) 38,000
2) Allotment of two shares for every three shares applied for 1,60,000
3) Allotment of one share for every four shares applied for 2,000
Cash amounting to Rs. 77,500 (being application money received with applications on 31000 shares
upon which no allotments were made) as returned to applicants on May 6, 2002.
Excess amount received on application transferred to allotment and calls
The amounts called from the allottees were received on the due dates with the exception of the
final call on 100 shares. These shares were forfeited on November 15, 2002 and reissued to
A on November 16 for payment of Rs. 9 per share.
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 51 -
Ans-Amount received on allotment-7,31,000; 1 st Call-4,74,000 ;2 Nd call :-4,79,750 Capital
Reserve Rs:-650
Table default
No. of
shares
Application
money
Allotment
money
1 st call
money
2 nd call
money
3 rd call
money
Que-122 A limited company was registered with an authorized Capital of Rs. 2,00,000 in Rs. 10 per
share, of these 6000 shares re-issued as fully paid to the vendors for the purchase of
building, 8000 shares were subscribed for by the public and during the first year Rs. 5 per
share were called up, payable
Rs. 2 on application, Rs. 1 on allotment, Rs. 1 on first call and Rs. 1 on second call. The
amounts received in respect of these shares were as follows;
On 6000 shares the full amount called.
On 1250 shares Rs. 4 per share.
On 500 shares Rs. 3 per share.
On 250 shares Rs. 2 per share.
The directors forfeited 750 shares on which less than Rs. 4 per share had been paid. Show
journal entries in the books of the company and also show the Share capital as it would
appear in the Balance Sheet.
Ans- Allotment Rs. 7,750; 1 st Call Rs. 7,250; Final Call-6,000; Amount of Forfeiture-2,000
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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Que-123 ABC Ltd. issued 16000 equity shares of Rs. 10 each Rs. 5 per share was called, payable Rs.
2 on application, Rs. 1 on allotment, Rs. 1 on first call and Rs. 1 on second call. The amount
received was as follows;
On 12000 shares the full amount called
On 2500 shares Rs. 4 per share
On 1000 shares Rs. 3 per share
On 500 shares Rs. 2 per share
Those shareholder who paid less than 4 rupee their share were forfeited .
Prepare journal and the Balance Sheet
Ans-Amount received on allotment-15,500; 1 st Call-14,500 ;2 nd call, Rs:-12000
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 53 -
Issue of Shares Other than for cash consideration
Issue of Shares to the promoter Issue of shares for purchasing any Running
business or assets
Purchase of an asset
Assets A/c Dr. {Amount of assets purchased}
To Vendor {Amount of assets purchased}
(Assets purchased from vendor)
Shares can be issued at
- Par
- Premium
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
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When shares are issued at Par:
Vendor A/c Dr.
To Share Capital
No. of Shares to be issued = Amount payable to Vendor
Par Value
Que-124 ABC Ltd. Purchase machinery from Rajiv Ltd. For Rs. 15,000. Payment is to be made by
issuing shares of Rs. 10 each. Pass necessary journal entries.
Ans-No. of shares to be issued –1,500
Que-125 L ltd. Purchased land for Rs. 9,50,00,000 from Ram Bros., Rs 50,00,000 was paid through
the bank draft and the balance by the issue of Equity shares of Rs 100 each at par pass the
necessary journal entries
Ans-No. of shares to be issued -9,00,000
Que-126 M ltd purchased the business of Shyam ltd. For Rs. 1,00,000 payable 10 percent in cash
and the balance in fully paid shares of Rs. 11 each. Give the necessary journal entries.(par
value Rs 11)and fraction if any is to be paid in cash .
Ans-No. of shares to be issued -8,181
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 55 -
When shares are issued at Premium:
Vendor A/c Dr. [Amount payable]
To Share Capital [No. of shares issued * Par value per share]
To Security Premium [No. of shares issued * premium per share]
(Being shares are issued at premium to the vendor)
No. of Shares to be issued = Amount payable to Vendor
Par Value + premium per share
Que-127 ABC Ltd. Purchased machinery worth Rs. 1,10,000 from Ganesh Ltd. Payment is to be
made by issuing fully paid shares of Rs. 100 each at a premium of 10 percent. Pass
necessary journal entries.
Ans-No. Of shares to be issued –1,000
Que-128 PQ ltd purchases a machinery from PK ltd for Rs 1,25,000 , RS 5,000 is to be paid in cash
and Issued a B/P for Rs 20,000 for a period of 2 month .For the balance the company issued
Equity shares of Rs 100 each at a premium of 10%
Answer :- No. Of shares to be issued –909 and Rs 10 is to b e paid in cash
Que-129 Q ltd. purchased the assets of Krishan ltd. For Rs. 3,50,000 . A sum of 75,000 is to be paid
by means of bill payable ,payable after 3 month and for the balance issued 25,000 fully
paid shares of Rs. 10 each in full satisfaction of his claim . Give the necessary journal entries
Ans-amount of security premium :-25,000
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 56 -
Issue of shares to Promoter
Goodwill A/c Dr. [Amount payable to promoter]
To Share Capital [Amount payable to promoter]
(Being shares issued to promoters for his services)
Issue of shares to underwriter
Que-130 10,000 shares of Rs. 10 each issued to the promoters for the services rendered by him.
Pass journal entries.
Answer :- No. of shares to be issued -4,000
Que-131 11,000 shares of Rs. 10 each fully paid up issued to promoters at a premium of 10
percent for the services rendered by them to the Co. Pass necessary journal entries.
Ans-No. of shares to be issued -11,000
Que-132 A ltd. Issued 2,000 shares of Rs. 10 each credited as fully paid to the promoters for their
services and issued 1,000 shares of Rs. 10 each credited as fully paid to the underwriters for
their underwriting services. Journalize these transactions.
Ans-No. of shares to be issued – 3,000
Que:-133 15,000 shares of Rs 100 each are issued to promoter and 12,000 to underwriter as
under writing commission
1) At par 2) At discount of 4% 3)At premium 10%
Pass necessary Journal entries
Ans:- Total amount payable to promoter at par :-15,00,000 & at Premium 16,50,000
Total amount payable to underwriter :-12,00,000 and at premium Rs 13,20,000
Que:-134 Total payment due to promoter for their services 2,00,000 and the company decided to
issue shares for the payment as follows :-
1) Issue 20,000 shares @ 10 each
2) Issued 18,000 shares @ 10 each
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 57 -
Purchase of any running business
Assets A/c Dr. [Amount of assets purchased]
Goodwill A/c Dr. [Balancing figure]
To Vendor [Amount payable to vendor or purchase consideration]
To liabilities [Amount of liabilities]
To Capital reserve [balancing figure]
(Being a running business purchased)
Note: purchase consideration is the amount paid by the purchasing company for purchasing
of assets/business from another enterprise. Purchase consideration is arrived at by using
the following formula.
Purchase Consideration = Value of Assets – Liabilities assumed
Que-135 R ltd. purchased the assets of S ltd. for Rs. 5,00,000. It also agreed to take over the
liabilities of S ltd. amounting to Rs. 2,00,000 for a purchase considering of Rs. 2,80,000. The
payment to S ltd. was made by issue of equity share of Rs. 100 each at par. Pass necessary
journal entries in the books of R ltd.
Ans-Capital Reserve Rs. 20,000;
No. of share to be Issued :-2,800
Que:-136 Madhav Ltd Issued fully paid equity shares of Rs 75 each at a premium of Rs 5 per share
for the purchase of the running business from Gupta bros. for a sum of 15,00,000 . the assets
and liabilities consist the following :-
Plant Rs 5,00,0000 , Truck:- 7,00,000 , Stock :-3,00,000 , Machinery :-6,00,000 and sundry
creditor Rs 5,00,000
You are required to pass the necessary Journal entries for the above transaction in the books of
Madhav Ltd
Ans:-Capital reserve :-1,00,000 ;No. of shares to be issued :-18,750
Que:-137 X ltd purchase a running business from Y ltd for a sum of 30,00,000 , payable 40% by a
cheque and balance by issue of fully paid equity shares of Rs 100 each at a premium of 20% . the
asset and liability consist of the following :
Building -12,00,000
Plant and machinery -8,00,000
Stock -5,00,000
Deepak Nagar Issue of Shares 9811752801
ANOTHER NAME OF SUCCESS
H.no-1658, Sector-28, Faridabad, Call-9811752801
- 58 -
Sundry Debtor -4,30,000
Cash -90,000
Sundry Creditor -2,00,000
You are required to pass the necessary Journal entries for the above transaction in the books of X
ltd
Answer :-
Value of goodwill :-1,80,000
No. of share to be issued :-15,000
Que-138 A company purchased assets of the book value of Rs. 6,00,000 and took over liabilities of
Rs. 1,50,000 from Golden ltd. It was agreed that the purchase consideration settled at Rs. 4,
80,000 be paid by issuing preference shares of Rs. 100 each at a premium of 10%. It was
further agreed that any fraction of the preference shares be paid in cash. Give journal
entries in the books of purchasing company. Any fraction is to be paid in cash
No. of preference shares to be issued 4,363 and Rs 70 is to be paid in cash .
Value of goodwill :-30,000
Que:-139 A company purchase assets worth Rs25,00,000and liability of Rs 10,00,000 . payment was
as follows :- 7,500 equity shares of Rs 100 were issued at a premium of 50 % plus a cash payment
of
4,00,000 by way of bank draft .give journal entries
Ans:- Value of goodwill :-25,000
