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Question
State the preliminary steps in the issue of shares
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Life machine tools Limited, issued 50,000 equity shares of Rs 10 each at Rs 12 per share, payable at to Rs 5 on application (including premium), Rs 4 on allotment and the balance on the first and final call.
Applications for 70,000 shares had been received. Of the cash received, Rs 40,000 was returned and Rs 60,000 was applied to the amount due on allotment, the balance of which was paid. All shareholders paid the call due, with the exception of one share holder of 500 shares. These shares were forfeited and reissued as fully paid at Rs 8 per share. Journalise the transactions.
Bharat Ltd. was incorporated with a capital of ₹ 2,00,000 divided into shares of ₹ 10 each. 2,000 shares were offered for subscription and out of these, 1,800 shares were applied for and allotted. ₹ 3 per share (including ₹ 1 premium) was payable on application, ₹ 4 per share (including ₹ 1 premium) on allotment, ₹ 2 per share on first call and ₹ 3 per share on final call. All the money was received. Give necessary Journal entries and show share capital in the Balance Sheet.
Varun Ltd. issued ₹ 10,00,000 shares of ₹ 100 each at a premium of ₹ 20 for subscription payable as:
₹ 40 per share and ₹ 10 premium on allotment, and
₹ 50 per share and ₹ 10 premium on final payment.
Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received.
Pass necessary entries in the company's books to record the above transactions. Also, prepare company's Balance Sheet on completion of the above transactions.
Ghosh Ltd. made the second and final call on its 50,000 Equity Shares @ ₹ 2 per share on 1st January, 2016. The entire amount was received on 15th January, 2016 except on 100 shares allotted to Venkat. Pass necessary journal entries for the call money due and received by opening Calls-in-Arrears Account.
U.P. Sugar Works Ltd. was registered on 1st January, 2019 with an authorised capital of ₹ 15,00,000 divided into 15,000 shares of ₹ 100 each. The company issued on 1st April, 2019, 5,000 shares of ₹ 100 each at a premium of ₹ 5 per share payable ₹ 25 per share on application , ₹ 30 (including premium) on allotment and the balance in two equal installments of ₹ 25 each on 1st July and 1st October respectively. All the allotments and call moneys were paid when due, except in case of one shareholder who failed to pay the final call on 100 shares held by him. His shares were forfeited on 1st November after giving him a due notice. Show necessary entries in the books of the company to record these transactions.
New Company Ltd. has a nominal capital of ₹ 2,50,000 in shares of ₹ 10. Of these, 4,000 shares were issued as fully paid in payment of building purchased , 8,000 shares were subscribed by the public and during the first year ₹ 5 per share were called-up, payable ₹ 2 on application , ₹ 1 on allotment, ₹ 1 on first call and ₹ 1 on second call . The amounts received in respect of these shares were:
| On 6,000 shares | Full amount called, |
| On 1,250 shares | ₹ 4 per share, |
| On 500 shares | ₹ 3 per share, |
| On 250 shares | ₹ 2 per share. |
The Directors forfeited the 750 shares on which less than ₹ 4 had been paid . The shares were subsequently reissued at ₹ 3 per share .
Pass journal entries recording the above transactions and prepare the company's Balance Sheet.
Kamal Ltd. was formed on 1st April, 2010 with an authorised capital of ₹ 2,00,000 , divided into 2,000 Equity Shares of ₹ 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of ₹ 5 per share payable as:
| On application | ₹ 10 per share, |
| On allotment | ₹ 25 per share(including premium), |
| On first call | ₹ 40 per share, |
| On final call | ₹ 30 per share. |
Applications were received for 900 shares which were duly allotted and the allotment money was received in full . At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ ₹ 60 per share , ₹ 70 per share paid-up.
Final call has not been made.
You are required to
(i) give necessary journal entries to record the above transactions and
(ii) show how share capital would appear in the Balance Sheet of the company.
VXN Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at a premium of ₹ 8 per share . The amount was payable as follows:
| On Application | ------ | ₹ 4 per share (Including ₹ 2 premium); |
| On Allotment | ------ | ₹ 6 per share (Including ₹ 3 premium); |
| On First Call | ----- | ₹ 5 per share (Including ₹ 1 premium); and |
| On Second and Final Call |
----- |
Balance Amount |
The issue was fully subscribed . Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal's shares were immediately forfeited after allotment . Afterwards, the first call was made. Krishna, a holder of 100 shares , failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call . Krishna's shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received . All the forfeited shares were reissued at ₹ 9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.
Alfa Ltd. invited applications for issuing 75,000 equity shares of ₹ 10 each. The amount was payable as follows:
| On application and allotment | — | ₹ 4 per share , |
| On first Call | — | ₹ 3 per share, |
| On second and final Call | — | balance. |
Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due on first call. Vibha who was allotted 750 shares failed to pay the first call . Her shares were immediately forfeited . Afterwards the second call was made. The amount due on second call was also received except on 1,000 shares applied by Monika . Her shares were also forfeited. All the forefited shares were reissued to Mohit for ₹9,000 as fully paid-up.
Pass necessary journal entries in the Books of Alfa Ltd . for the above transactions.
Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of ₹ 10 each at a premium of ₹ 3 per share. The amount was payable as follows:
| On application | --- | ₹ 6 per share(including premium ₹1); |
| On allotment | --- | ₹ 3 per share(including premium ₹ 1); and |
| The balance | --- | on First and Final call. |
Applications for 1,80,000 shares were received .Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants.Over payment received on application was adjusted towards sums due on allotment . All calls were made and were duly received except allotment and final call from Aditya who was allotted 3,200 shares. His shares were forfeited . Half of the forfeited shares were reissued for ₹ 43,000 as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Nitro Paints Ltd.
Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹10 each at a premium of ₹ 3 per share payable as follows:
| With application | --- | ₹2, |
| On allotment (including premium) | --- | ₹5, |
| On first call | --- | ₹3, |
| On second call | --- | ₹3. |
Applications were received for 30,000 shares and allotment was made on pro rata basis. Money overpaid on application s was adjusted to the amount due on allotment.
Mr Mohit whom 400 shares were allotted , failed to pay the allotment money and the first call , and his shares were forfeited after the first call . Mr Joly, whom 600 shares were allotted , failed to pay for the two calls and hence, his shares were forfeited .
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for ₹ 9 per share , the whole of Mr Mohit's shares being included.
XYZ Ltd. invited applications for issuing 50,000 Equity Shares of ₹10 each . The amount was payable as:
| On application | --- | ₹ 3 per share, |
| On allotment | --- | ₹ 4 per share, |
| On first and final call | --- | ₹ 3 per share. |
Applications were received for 75,000 shares and pro rata allotment was made as:
Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis.
Applicants for 35,000 shares were allotted 30,000 shares on pro rata basis.
Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment .
Shamu, who had applied for 700 shares out of the group applying for 35,000 shares , failed to pay the first and final call . His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. 8 per share as fully paid-up. The reissued shares included all the forfeited shares of Shamu.
Pass necessary Journal entries to record the above transactions.
Super Star Ltd. issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a premium of ₹ 2 per share , payable as:
| On application | --- | ₹ 3 per share (including ₹ 1 premium), |
| On allotment | --- | ₹ 4 per share (including ₹ 1 premium), |
| On first call | --- | ₹ 3 per share |
| On second and final call | --- | ₹ 2 per share. |
Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares . It was decided to utilise excess application money towards the amount due on allotment .
Ramesh, to whom 40 shares were allotted , failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Rajesh, who applied for 72 shares failed to pay the two calls and on such failure, his shares were forfeited .
Of the shares forfeited, 80 shares were sold to Krishan credited as fully paid-up for ₹ 9 per share, the whole of Ramesh's shares being included.
Give journal entries to record the above transactions ( including cash transactions).
Bharat Ltd . invited applications for issuing 2,00,000 Equity Shares of ₹ 10 each. The amount was payable as:
On application ₹ 3 per share , on allotment ₹ 5 per share and on first and final call ₹ 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis.
Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment . Sharma, who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call . His shares were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ ₹ 8 per share . The reissued shares included all the forfeited shares of Bajaj.
Give necessary journal entries to record the above transactions.
Write short note on procedure for transfer of shares
Explain the secretarial procedure involved in the allotment of shares.
Which type of capital will be written after the authorized capital in the balance sheet?
Amay Ltd invited applications for issuing 10,000, 8% debentures of ₹ 100 each. The amount was payable as follows:
₹ 30 on application and ₹ 70 on allotment. The public applied for 12,000 debentures. Applications for 8,000 debentures were accepted in full; applications for 3,000 debentures were allotted 2,000 debentures and the remaining applications were rejected. All money was duly received. Pass the necessary journal entries in the books of the company for the above transactions.
