Advertisements
Advertisements
Question
Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹ 10 each, issued the entire amount of the shares payable as:
₹ 5 on application (including premium ₹ 2 per share),
₹ 4 on allotment, and
₹ 3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on which the allotment money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7 per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.
Solution
Authorised capital 20,000 shares of 10 each
Issued and applied 20,000 shares of Rs 10 each at a premium Rs 2
Payable as:
|
Application |
= |
Rs 5 |
(3+2) |
|
Allotment |
= |
Rs 4 |
|
|
First and Final Call |
= |
Rs 3 |
|
|
|
|
Rs 12 |
(10+2) |
Books of Krishna & Co. Ltd.
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
|
Bank A/c |
Dr. |
|
1,00,000 |
|
|
|
To Equity Share Application A/c |
|
|
1,00,000 |
|
|
|
(Share application money received for 20,000 shares at Rs 5 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Application A/c |
Dr. |
|
1,00,000 |
|
|
|
To Equity Share Capital A/c |
|
|
60,000 |
|
|
|
To Securities Premium A/c |
|
|
40,000 |
|
|
|
(Share application of 20,000 shares transferred to Shares Capital at Rs 3 per share and Securities Premium and Rs 2 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Allotment A/c |
Dr. |
|
80,000 |
|
|
|
To Equity Share Capital A/c |
|
|
80,000 |
|
|
|
(Share allotment due on 20,000 shares at Rs 4 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
79,200 |
|
|
|
Calls-in-Arrears A/c |
Dr. |
|
800 |
|
|
|
To Equity Share Allotment A/c |
|
|
80,000 |
|
|
|
(Share allotment received on 19,800 shares and holders of 200 shares failed to pay it) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share first and final call A/c |
Dr. |
|
60,000 |
|
|
|
To Equity Share Capital A/c |
|
|
60,000 |
|
|
|
(First and Final call due on 20,000 shares at Rs 3 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
58,500 |
|
|
|
Calls-in-Arrears A/c |
Dr. |
|
1,500 |
|
|
|
To Equity Share First And Final Call A/c |
|
|
60,000 |
|
|
|
(Share first and final call of Rs 3 each received on 19,500 shares and holders of 500 shares failed to pay it) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Capital A/c |
Dr. |
|
2,000 |
|
|
|
To Share Forfeiture A/c |
|
|
600 |
|
|
|
To Calls-in-Arrears A/c |
|
|
1,400 |
|
|
|
(200 shares of Rs 10 each forfeited for the non-payment of allotment Rs 4 and call Rs 7 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Capital A/c |
Dr. |
|
3,000 |
|
|
|
To Share Forfeiture A/c |
|
|
2,100 |
|
|
|
To Calls-in-Arrears A/c |
|
|
900 |
|
|
|
(300 shares of Rs 10 each forfeited for the non-payment of call money Rs 3 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
2,800 |
|
|
|
Share Forfeiture A/c |
Dr. |
|
1,200 |
|
|
|
To Share Capital |
|
|
4,000 |
|
|
|
(400 shares of Rs 10 each re-issued at Rs 7 per share as fully paid-up) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Forfeiture A/c |
Dr. |
|
800 |
|
|
|
To Capital Reserve A/c |
|
|
800 |
|
|
|
(Balance in share forfeiture of 400 shares transferred to Capital Reserve) |
|
|
|
|
As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.
Krishna & Co Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Funds |
|
|
|
a. Share Capital |
1 |
1,99,700 |
|
b. Reserves and Surplus |
2 |
40,800 |
|
2. Non-Current Liabilities |
|
|
|
3. Current Liabilities |
|
|
|
Total |
|
2,40,500 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
3 |
2,40,500 |
|
Total |
|
2,40,500 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
||
|
1 |
Share Capital |
|
||
|
|
Authorised Share Capital |
|
||
|
|
20,000 Equity Shares of Rs 10 each |
2,00,000 |
||
|
|
Issued Share Capital |
|
||
|
|
20,000 Equity Shares of Rs 10 each |
2,00,000 |
||
|
|
Subscribed, Called-up and Paid-up Share Capital |
|
||
|
|
19,900 Equity Shares of Rs 10 each |
1,99,000 |
1,99,700 |
|
|
|
Add: Shares Forfeited (100 shares × Rs 7) |
700 |
||
|
2 |
Reserves and Surplus |
|
||
|
|
Securities Premium |
40,000 |
40,800 |
|
|
|
Capital Reserve |
800 |
||
|
3 |
Cash and Cash Equivalents |
|
||
|
|
Cash at Bank |
2,40,500 |
||
Working Notes:
|
1. |
Capital Reserve of 200 shares on which only application received |
||
|
|
Share Forfeiture Cr. |
3 |
per share (excluding premium) |
|
|
Share Forfeiture Dr. |
3 |
per share |
|
|
Balance of Share Forfeiture |
NIL |
|
|
2. |
Capital Reserve of 200 shares on which application and allotment received |
||
|
|
Share Forfeiture Cr. |
Rs 7 |
per share (excluding premium) |
|
|
Share Forfeiture Dr. |
Rs 3 |
per share |
|
|
Balance in Share Forfeiture |
Rs 4 |
per share |
|
Capital Reserve |
= |
200 Shares × Balance of Share Forfeiture (per share) |
|
|
= |
200 × 4 |
|
|
= |
Rs 800 |
APPEARS IN
RELATED QUESTIONS
KS Ltd invited application for issuing 1, 60,000 equity shares of Rs.10 each at a premium of 6 per share. The amount was payable as follows;
On Application Rs.4 per share (including premium Rs.1 per share)
On Allotment Rs.6 per share (including premium Rs.3 per share)
On First and Final Call – Balance
Application for 3, 20,000 shares were received. Applications for 80,000 share were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with application was adjusted towards surns due on allotment. Jain holding 800 shares failed to pay the allotment money his shares were forfeited immediately after allotment. Afterwards the final call was made. Gupta who has applied for 1200 shares failed to pay the final call. These shares were forfeited. Out of the forfeited shares 1000 shares were re-issued at 8 per share fully paid up. The re-issued shares included all the forfeited shares of Jain
Pass necessary journal entries for the above transactions in the books of KS Ltd.
XYZ Ltd. invited applications for 40,000 equity shares of Rs.100 each at a discount of 6%. The amount was payable as follows:
On Application and Allotment - Rs.90 per share
On First and Final call - the balance amount.
Applications for 60,000 shares were received. Applications for 10,000 shares were rejected and shares were allotted on pro-rata basis to remaining applicants. Excess application money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. A shareholder, who applied for 50 share, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were re-issued at Rs.97 per share fully paid up. Pass necessary journal entries for the above transactions in the books of XYZ Ltd.
'Amrit Dhara Ltd.' invited applications for issuing 80,000 equity shares of Rs 10 each. The amount was payable as follows:
On application and allotment - Rs 2 per share
On the first call - Rs 4 per share
On the second and final call the balance
Applications for 1,00,000 shares were received. Shares were allotted on pro-rata basis to all the
applicants. Excess money received with applications was adjusted towards sums due on the first call. Manohar who had applied for 2,000 shares failed to pay the first call and his shares were immediately forfeited. Afterwards, a second and final call was made. Mahan who was allotted 2,400 shares failed to pay the second and final call. His shares were also forfeited. All the forfeited shares were re-issued at Rs 9 per share as fully paid up.
Pass necessary Journal Entries in the books of the company for the above transactions
'Blur Star Ltd.' was registered with an authorized capital of Rs 2,00,000 divided into 20,000 shares of Rs 10 each. 6,000 of these shares were issued to the vendor for building purchased. 8,000 shares were issued to the public and Rs 5 per share were called up as follows:
On application - Rs 2 per share
On allotment - Rs 1 per share
On the first call - Balance of the called up amount
The amounts received on these shares were as follows:
On 6,000 shares - Full amount called
On 1,250 shares - Rs 3 per share
On 750 shares - Rs 2 per share
The directors forfeited 750 shares on which Rs 2 per share were received.
Pass necessary journal entries for the above transactions in the books of Blue Star Ltd
Luxury Cars Ltd.' invited applications for issuing 10,000 equity shares of Rs 50 each at a premium of Rs 100 per share. The amount was payable as follows :
On application - Rs 75 per share (including Rs 50 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares were forfeited. The forfeited shares were later on re-issued for Rs 90 per share as fully paid up.
Pass necessary journal entries for the above transaction in the books of the company.
'Nigam Limited' invited applications for issuing 15,000 equity shares of Rs 10 each at a discount of Rs 1 per share. The amount was payable as follows:
On application - Rs 2 per share
On allotment - Rs 3 per share
On first and final call - Rs 4 per share
Applications for 18,000 shares were received. Shares were issued proportionately to all applicants. Excess money received with applications was adjusted towards sums due on allotment. Ramesh who had applied for 360 shares failed to pay allotment and first and final call money. Naresh to whom 150 shares were allotted failed to pay the first and final call money. Shares of both Ramesh and Naresh were forfeited. Out of the forfeited shares, 200 shares were re-issued at `9 per share as fully paid up. The re-issued shares included all the shares of Naresh. Pass necessary journal entries for the above transactions in the books of 'Nigam Limited'.
'Guru Limited' invited applications for issuing 80,000 equity shares of Rs 10 each at a premium of Rs 10 per share. The amount was payable as follows:
On application and allotment - Rs 10 (including Rs 5 premium)
On first and final call - Rs 10 (including Rs 5 premium)
Applications for 1,00,000 share were received. Applications for 10,000 shares were rejected and
application money was refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess application money received from applicants to whom shares were allotted on pro-rata basis was adjusted towards sums due on first and final call. All calls were made and were duly received except the first and final call money from Kumar who had applied for 1,800 shares. His shares were forfeited. The forfeited shares were re-issued at Rs 9 per share as fully paid up. Pass necessary journal entries for the above transactions in the books of 'Guru Limited'.
Ratan Limited invited applications for issuing 12,000 equity shares of Rs 100 each at a premium of Rs 75 per share. The amount was payable as follows :
On application and allotment — Rs 100 per share (including Rs 50 premium)
On first and final call — The balance
Applications for 15,000 shares were received. Shares were allotted on pro-rata basis to all applicants. Excess money received with applications was adjusted towards sums due on first and final call. Govind who had applied for 300 shares paid the full share money at the time of applying for shares. Girdhar, who had applied for 600 shares, failed to pay the first and final call money. His shares were forfeited. Out of the forfeited shares, 300 shares were re-issued at Rs 90 per share as fully paid-up.
Pass necessary journal entries for the above transactions in the books of 'Ratan Limited'.
KY Ltd. invited applications for issuing 60,000 equity shares of Rs 10 each at a premium of `4 per share. The amount was payable as follows:
On applications and allotment - Rs 8 per share (including premium)
On first and final call - the balance amount
Applications for 2,00,000 shares were received. Applications for 80,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 600 shares applied by Ravi. His shares were forfeited. The forfeited shares were re-issued at a discount of Rs 8 per share.
Pass necessary journal entries for the above transactions in the books of KY Ltd
Record the journal entries for forfeiture and reissue of shares in the following cases:
a. X Ltd. forfeited 20 shares of Rs 10 each, Rs 7 called upon which the shareholder had paid application and allotment money of Rs 5 per share. Out of these, 15 shares were re-issued to Naresh as Rs 7 per share paid up for rs 8 per share.
b. Y Ltd. forfeited 90 shares of Rs 10 each, Rs 8 called up issued at a premium of Rs 2 per share to 'R' for nonpayment of allotment money of Rs 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as `8 called up for Rs 10 per share.
c. Z Ltd. forfeited 300 shares of Rs 10 each issued at a discount of Rs 1 per share for non-payment of first and final call of Rs 3 per share. Out of these 200 shares were reissued at Rs 3 per share fully paid up.
State, whether the following statements is True or False.
A public company forfeits share on non-payment of final call only.
Super Star Ltd. makes an issue of 10,000 Equity Shares of ₹ 100 each, payable as:
| On application and allotment | ₹ 50 per share, |
| On first call | ₹ 25 per share, |
| On second and final call | ₹ 25 per share. |
Members holding 400 shares did not pay the second and final call and the shares are duly forfeited, 200 of which are reissued as fully paid-up @₹ 50 per share. Pass journal entries in the books of the company.
Sunshine Ltd. issued 20,000 shares of ₹ 100 each payable ₹ 25 per share on application , ₹ 25 per share on allotment and the balance in two calls of ₹ 25 each. The company did not make the final call of ₹ 25 per share. All the money was duly received with the exception of the amount due on the first call on 400 shares held by Mr. Modi. The Board of Directors forfeited these shares and subsequently reissued them @ ₹ 75 per share paid-up for a sum of ₹ 28,000.
Journalise the above transactions and prepare Share Capital Account.
Show the forfeiture and reissue entries under each of the following cases:
(i) X Ltd. forfeited 300 shares of ₹ 10 each, ₹ 8 called-up held by Mr. A for non-payment of second call money of ₹ 3 per share. These shares were reissued to Mr. Z for ₹ 10 per share as fully paid-up.
(ii) Y Ltd. forfeited 400 shares of ₹ 10 each, fully called-up, held by Mr. B for non-payment of final call money of ₹ 4 per share. These shares were reissued to Mr. T at ₹ 12 per share as fully paid-up.
(iii) Light Ltd. forfeited 250 shares of ₹ 10 each, fully called-up held by Mr. C for non-payment of allotment money of ₹ 3 per share and first and final call money of ₹ 4 per share. These shares were reissued @ ₹ 8 per share as fully paid-up to Mr. P.
VT Ltd forfeited 200 shares of ₹ 10 each , issued at a premium of ₹ 5 per share , held by Mohan for non-payment of the final call of ₹ 3 per share . 100 out of these shares were reissued to Narendra at a discount of ₹ 4 per share . Journalise.
The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per share , for the non-payment of the first call money of ₹ 2 per share . The final call of ₹ 2 per share has not been made. Half the forfeited shares were reissued at ₹ 1,500 as fully paid-up. Record the journal entries for the forfeiture and reissue of shares.
JCV Ltd., forfeited 200 shares of ₹ 10 each issued at a premium of ₹ 2 per share for the non-payment of allotment money of ₹ 3 per share (including premium). The first and final call of ₹ 4 per share has not been made as yet . 50% of the forfeited shares were reissued at ₹ 8 per share as fully paid-up . Pass necessary Journal entries for the forfeiture and reissue of shares.
Amrit Ltd. issued 50,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as ₹ 3 on application, ₹ 4 on allotment (including premium) , ₹ 2 on first call and the remaining on second call.
Applications were received for 75,000 shares and pro rata allotment was made to all the applicants.
All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for ₹ 9,600. Final call was not made . Pass necessary Journal entries.
DF Ltd. invited applications for issuing 50,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:
On Application : ₹ 3 per share (including premium ₹ 1)
On Allotment : ₹ 3 per share (including premium ₹ 1)
On First call : ₹ 3 per share
On Second and Final Call: Balance amount
Application for 70,000 shares was received. Allotment was made on the following basis.
Applications for 5,000 shares – Full
Applications for 50,000 shares – 90%
Balance of the applications was rejected. ₹ 1,11,000 were received on account of allotment. The amount of allotment due from the shareholders to whom shares were allotted on pro-rata basis was fully received. A few shareholders to whom shares were allotted in full, failed to pay the allotment money. ₹ 1,20,000 were received on the first call. Directors decided to forfeit those shares on which allotment and call money were due. Half of the forfeited shares were re-issued @ ₹ 8 per share fully paid up. Final call was not made.
Pass the necessary journal entries for the above transactions in the book of DF Ltd.
Money received in advance from shareholders before it is actually called-up by the directors is ______.
Balance of share forfeiture account is shown in the balance sheet under the item ______.
Which of the following is a free reserve?
What will be the correct sequence of events?
- Forfeiture of shares.
- Default on Calls.
- Re-issue of shares.
- Amount transferred to capital reserve.
When shares are forfeited, the Share Capital Account is debited with the:
Forfeiture of shares results in the reduction of:
Discount allowed on re-issue of forfeited shares is debited to ______.
When forfeited shares are re-issued the amount of discount allowed on these shares cannot exceed ______.
A forfeited share can ______
If 400 shares of ₹ 100 issued at a premium of ₹ 30 on which the full amount has been called and ₹ 80 (including premium) have been received are forfeited, the share forfeiture account should be credited with ______.
Based on the below information, you are required to answer the following question:
|
Nidiya Limited was incorporated on 1st April 2017 with a registered office in Mumbai. The capital clause of the memorandum of Association reflected a registered capital of 8,00,000 equity shares of ₹ 10 each and 1,00,000 preference shares of ₹ 50 each. Since some large investments were required for building and machinery the company in consultation with vendors, M/s VPS Enterprises, issued 1,00,000 equity shares and 20,000 preference shares at par with them in full consideration of assets acquired. Besides this, the company issued 2,00,000 equity shares for cash at par payable as ₹ 3 on application, 2 on the allotment, 3 on the first call and 2 on the second call. Till date, the second call has not yet been made and all the shareholders have paid except Mr. Ajay who did not pay allotment and calls on his 300 shares and Mr. Vipul who did not pay the first call on his 200 shares. Shares of Mr. Ajay were then forfeited and out of the 100 shares were reissued at ₹ 12 per share. |
What amount of share forfeiture would be reflected in the balance sheet?
At the time of forfeiture, the share Capital Account is debited with ______
An equity share of ₹10 fully called up on which ₹ 6 has been paid was forfeited for the non-payment of the balance amount. At which of the following minimum price can it be reissued?
200 equity shares of ₹10 each issued at par were forfeited for non-payment of first call of ₹3 per share. Final call of ₹2 per share was not yet called. By which amount the share capital will be debited on forfeiture?
Tulip Ltd. allotted 45,000 Equity shares of ₹ 10 each to the public. The first and final call of ₹ 2 per share was not received on 1,000 shares, which were forfeited by the company. Later, 600 of the forfeited shares were reissued at ₹ 7 fully paid-up. What is the Subscribed Capital of the company?
