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Question
X Ltd., issued 50,000 shares of Rs 10 each at a premium of Rs 2 per share payable as follows:
Rs 3 on application
Rs 6 on allotment (including premium) and Rs 3 on call
Applications were received for 75,000 shares and a pro-rata allotment was made as follows:
To the applicants of 40,000 shares, 30,000 shares were issued and for the rest 20,000 shares were issued. All money due were received except the allotment and call money from Ram who had applied for 1,200 shares (out of the group of 40,000 shares). All his shares were forfeited. The forfeited shares were re-issued for Rs 7 per share fully paid up. Pass necessary Journal Entries for the above transaction.
Solution
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Bank A/c (75,000 shares × Rs 3) |
Dr. |
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2,25,000 |
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To Share Application A/c |
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2,25,000 |
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(Application money received) |
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Share Application A/c (75,000 shares × Rs 3) |
Dr. |
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2,25,000 |
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To Share Capital A/c (50,000 shares × Rs 3) |
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1,50,000 |
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To Share Allotment A/c (25,000 shares × Rs 3) |
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75,000 |
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(Application money transferred to share capital account and excess money adjusted to allotment) |
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Share Allotment A/c (50,000 shares × Rs 6) |
Dr. |
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3,00,000 |
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To Share Capital A/c (50,000 shares × Rs 4) |
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2,00,000 |
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To Securities Premium A/c (50,000 shares × Rs 2) |
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1,00,000 |
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(Allotment money due on 50,000 shares) |
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Bank A/c |
Dr. |
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2,20,500 |
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To Share Allotment A/c |
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2,20,500 |
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(Apllotment money receive ( 3,00,000 - 75,000 - 4,500)) |
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Share First and Final Call A/c (50,000 shares × Rs 3) |
Dr. |
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1,50,000 |
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To Share Capital A/c |
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1,50,000 |
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(First and final call money due) |
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Bank A/c |
Dr. |
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1,47,300 |
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To Share First and Final Call A/c |
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1,47,300 |
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(First and final call money received (1,50,000 - 2,700)) |
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Share Capital A/c (900 shares × Rs 10) |
Dr. |
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9,000 |
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Securities Premium A/c (900 shares × Rs 2) |
Dr. |
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1,800 |
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To Share Forfeiture A/c (WN*) |
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3,600 |
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To Share Allotment A/c (WN) |
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4,500 |
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To Share First and Final Call A/c (900 shares × Rs 3) |
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2,700 |
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(900 shares forfeited for non-payment of allotment and call money) |
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Bank A/c (900 shares × Rs 8) |
Dr. |
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7,200 |
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Share Forfeiture A/c (900 shares × Rs 2) |
Dr. |
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1,800 |
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To Share Capital A/c (900 shares × Rs 10) |
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9,000 |
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(900 shares re-issued for Rs 8 per share) |
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Share Forfeiture A/c |
Dr. |
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1,800 |
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To Capital Reserve A/c |
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1,800 |
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(Profit on re-issue transferred to capital reserve) |
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Notes
No. of shares applied by Ram = 1,200 shares
∴ No. of shares allotted to Ram=`(1,200)/(40,000)xx30,000= 900 "shares"`
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Particulars |
Amount (Rs) |
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Application money received from Ram (1,200 shares × Rs 3) |
3,600* |
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Less: Amount utilised on application (900 shares × Rs 3) |
2,700 |
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Excess Application Money |
900 |
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Amount due on allotment (900 shares × Rs 6) |
5,400 |
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Less: Excess application money adjusted |
(900) |
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Amount on allotment not received from Ram |
4,500 |
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Capital reserves are created from ______.
The balance of share forfeited account after the reissue of forfeited shares is transferred to ______.
Those companies whose shares are listed on a recognised stock exchange for public trading ______.
Shares can be forfeited for?
If the loss on the re-issue of shares is less than the amount forfeited, the 'surplus' or profit is transferred to:
Discount allowed on re-issue of forfeited shares is debited to ______.
Which of the following statement is false?
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 is the amount of security premium reflected in the balance sheet at the end of the year?
Pass entries for forfeiture and re-issue in the following case.
Ratan Ltd. forfeited 3,000 shares of ₹ 10 each (issued at ₹ 2 premium) for non-payment of first call of ₹ 2 per share. Final call of ₹ 3 per share was not yet made. Out of these 2,000 shares were re-issued at ₹ 10 per share as fully paid.
A company forfeited 3,000 shares of ₹ 10 each, on which only ₹ 5 per share (including ₹ 1 premium) has been paid. Out of these few shares were re-issued at a discount of ₹ 1 per share were and ₹ 6,000 were transferred to Capital Reserve. How many shares were re-issued?
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| Journal of Roxy Ltd. (an extract) | ||||
| Date | Particulars | L. F. | Dr. (₹) | Cr. (₹) |
| 1. | Share First Call A/c ...Dr. | 28,000 | ||
| To Share Capital A/c | 28,000 | |||
| (Being first call due on ___??___ shares @ ₹ 2 each) | ||||
| 2. | Bank A/c ...Dr. | ?? | ||
| Calls in arrears A/c ...Dr. | 2,000 | |||
| To Share First Call A/c | 28,000 | |||
| (Being first call received on ___??___ shares) | ||||
| 3. | Share Capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | 4,000 | |||
| To Calls in Arrears A/c | ?? | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non-payment of first call) | ||||
| 4. | Share Second & Final Call A/c ...Dr. | 52,000 | ||
| To Share capital A/c | 52,000 | |||
| (Being second & final call due on ___??___ shares @ ₹ 4 each) | ||||
| 5. | Bank A/c ...Dr. | ?? | ||
| Calls in Arrears A/c ...Dr. | 10,000 | |||
| To Share Second & Final Call A/c | 52,000 | |||
| (Being second call received on ___??___ shares) | ||||
| 6. | Share capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | ?? | |||
| To Calls in Arrears A/c | 10,000 | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non payment of final call) | ||||
| 7. | Bank A/c ...Dr. | ?? | ||
| Share Forfeited A/c ...Dr. | ?? | |||
| To Share Capital A/c | ?? | |||
| (Being 1,500 forfeited shares including those on which the first call was not received reissued @ ₹ 6 per shares fully called) | ||||
| 8. | Share Forfeiture A/c (1,000 × 0) + (500 × 2) ...Dr. | ?? | ||
| To Capital Reserve A/c | ?? | |||
| (Being ___??___) | ||||
You are required to complete the journal entries by filling up the missing information represented by '??', including the number of shares and narration, if any.
Savi Ltd. forfeited 50 shares of ₹ 100 each issued at a premium of 10%, on which allotment money of ₹ 30 per share (including premium) and first and final call of ₹ 40 per share were not received.
What is the minimum amount per share at which the company can reissue these shares?
Assertion: A company can reissue a forfeited share at an amount which is less than the amount not received on it.
Reason: A company can write off the net loss made on the reissue of a forfeited share from its capital reserve.
Which one of the following is correct?
