Accounting for Share Capital

(a)Pass all the journal entries for issue and forfeiture of equity shares with necessary working notes.

(c)Kapoor Ltd. with subscribed capital of INR 7,50,000 consisting of 75,000 Equity shares of INR 10 each; called up capital INR 7.50 per share. A bonus of INR 1,87,500 declared out of General Reserve to be applied in making the existing shares fully paid up.

Pass Journal Entries in the books of Kapoor Ltd.

( a )Below given is the Balance Sheet of Bharat Chemical Ltd. as on 31st March, 2025.

Balance Sheet of Bharat Chemical Ltd. as on 31st March, 2025

On 1st April, 2025, the Board of Directors decided that :

(i)The fully paid preference shares are to be redeemed at a premium of 4% on 1st May, 2025 and for that purpose 6 lakh equity shares of INR 10 each are to be issued at a premium of 5%.

Considering the information given above, pass the required journal entries in the books of the company.

( a )Following is the Balance Sheet of XYZ & Co. as on March 31, 2024 :

On April 1, 2024, the company announce buyback of 25% of equity share capital at INR 13/per share. For the purpose :

–Investments were sold for INR 300 lakhs

–Issued 4,00,000 preference shares of INR 100 each at par. Entire amount is payable at application.

The buyback was completed in due time. Show journal entries for above transactions.

(c)A Ltd. acquired assets worth INR 1,75,00,000/- from V Ltd. The consideration was paid as follows :

–Payment by cheque : INR 55,00,000/-

–Remaining by issue of shares to V Ltd. shares of INR 10/- are issued at a premium of 20%.

What will be the number of shares to be issued by A Ltd. to V Ltd ?

Pass all the journal entries.

................ are not redeemable, however, a company may buy back its ................... as per conditions prescribed under Companies Act, 2013.

(A)Equity Shares, Equity Shares

(B)Equity Shares, Preference Shares

(C)Preference Shares, Preference Shares

(D)Preference Shares, Equity Shares

Generally, the Articles of the company specify the rate at which interest will be payable/ receivable on calls-in-Advance/calls in Arrear. Table F of the Companies Act, 2013 will be applicable which leaves the matter to the Board of Directors to decide the rate of such interest, subject to a ....................... maximum rate of interest on calls-in Advance and calls-in Arrears.

(A)12% and 10%

(B)10% and 12%

(C)12% and 12%

(D)10% and 10%

When shares are bought back at discount, the journal entry passed is :

(A)Equity Share Capital a/c ............ Dr. To Equity Shareholders’ a/c. To Share Discount a/c.

(B)Equity Share Capital a/c ............ Dr. To Equity Shareholders’ a/c. To Capital Reserve a/c.

(C)Equity Share Capital a/c ............ Dr. Share Discount a/c ...................... Dr. To Equity Shareholders’ a/c.

(D)Equity Shareholders’ a/c ............ Dr. To Equity Share Capital a/c. To Share Discount a/c.

A part of the capital which can be called- up only at the time of winding up of the company is called ....................

(A)Reserve Capital

(B)Issued Capital

(C)Authorized Capital

(D)Subscribed Capital

This share capital in respect of dividend, in addition to the preferential right to the payment of dividends, has the right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right of repayment of dividend and repayment. This share capital is :

(A)Preference Share Capital

(B)Deemed Preference Share Capital

(C)Cumulative Preference Share Capital

(D)Non-Convertible Preference Share Capital

If interest on calls-in-advance is not mentioned in the articles then the rate must be decided by the Board of Directors subject to a maximum of 12% p.a. as per :

(A)Table A of the Companies Act 2013

(B)Table D of the Companies Act 2013

(C)Table F of the Companies Act 2013

(D)Table G of the Companies Act 2013

A company may allot fully paid shares to promoters or any other party for the services rendered by them, share capital account is credited and ............. debited.

(A)Preliminary expenses account

(B)Goodwill account

(C)Capital reserve account

(D)Suspense account

On 1st May, 2023, Z Ltd. makes an issue of 10,000 equity shares of ₹ 10 each payable as ₹ 2 on application, ₹ 3 on allotment with premium and ₹ 6 on first and final call after three months from allotment. One shareholder who was allotted with 200 shares paid first and final call with allotment money. If the directors have decided to allow interest on calls in advance as Table F, then the interest payable is :

(A)NIL

(B)₹ 15

(C)₹ 18

(D)₹ 36

Issue of ..................... signals the management’s confidence in accelerating or maintaining the profit growth.

(A)Right Shares

(B)Bonus Shares

(C)Sweat-equity shares

(D)All of the above

The market value of each share of X Ltd company is ₹ 40, and its equity share capital is ₹ 400 crores comprising of shares of face value of ₹ 100 each. The market value of the company is ................. .

(A)16000 lakh

(B)1600 lakh

(C)1 lakh

(D)16 lakh

(b)Assuming opening bank balance of ₹ 1,25,000, prepare the Bank account of the company in the light of above transactions.

(c)What are the restrictions on use of Securities Premium Account as per provisions of the Companies Act, 2013 ? What is the implication if a company violates these provisions ?

(b)On 1st April, 2022, the following balances were extracted from the ledger of X Limited :

(₹)

(i)10% redeemable preference share capital amount

The company redeemed all the preference shares at a premium of 5% and for the purpose, it issued equity shares of ₹ 10 each at a premium of ₹ 1 for such an amount as was necessary for the purpose after utilizing the available profits to the maximum possible extent.

You are required to pass the necessary journal entries for above mentioned transactions.

(c)The Summary Balance Sheet of ABC Ltd. as on 31st March, 2023 read as under :

The Annual General Meeting of ABC Ltd., it was resolved that :

(i)To issue one bonus share for every four shares held.

(ii)To repay the debentures at a premium of 3%.

Record the above transactions in the books of ABC Ltd. to meet the above resolutions.

Subscribed Share Capital is “that portion of the issued Share Capital which has actually been subscribed by the public and subsequently allotted to the shareholders by the entity”. This also includes any.............. issued to the Shareholders.

(A)Redeemable shares

(B)Preference shares

(C)Bonus shares

(D)Cumulative shares

Where any company fails to comply with the provisions of this section 53(3) of the Companies Act, 2013 in respect of the issue of shares at discount, such company and every officer who is in default shall be liable to a penalty which may extend to..........

(A)an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less

(B)an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is higher

(C)an amount equal to the amount raised through the issue of shares at a discount or fifty lakh rupees, whichever is less

(D)an amount equal to the amount raised through the issue of shares at a discount or fifty lakh rupees, whichever is higher

As per Table F of the Companies Act, 2013, the maximum rate of interest on calls in advance prescribed is ................ p.a.

(A)5%

(B)6%

(C)10%

(D)12%

ABC Limited issued at par 2, 00,000 equity shares of ₹ 10 each payable at ₹ 3 on application, ₹ 2.5 on the allotment, ₹ 2 on the first call and remaining on the final call. All the shares were fully subscribed. One of the shareholders who held 10,000 shares paid the full amount along with the first call itself. The final call was made after four months from the date of the first call. The amount of interest on calls in advance is ........... .

(A)₹ 500

(B)₹ 1,000

(C)₹ 833.33

(D)₹ 416.67

A limited company issued 10,000 equity shares of ₹ 100 each, payable ₹ 25 on application, ₹ 25 on allotment, ₹ 25 on first call and ₹ 25 on final call. One shareholder to whom 800 shares were allotted failed to pay the final call money. First call was made three months after the allotment and the final call was made three months after the first call. The company received calls-in-arrears on 800 shares 3 months after the final call became due. If the company adopts Table F of Schedule I, the maximum interest payable on calls-in-arrears is :

(A)₹ 500

(B)₹ 600

(C)₹ 1,000

(D)₹ 1,200

RR Ltd. has a paid-up equity share capital of ₹ 50 Crores in the year 2022-23. During the year, the company wants to issue sweat equity shares to its employees. Previously, if the company has not issued any such shares, to what extent the company can issue such shares during this year ?

(A)₹ 5 Crores

(B)₹ 7.5 Crores

(C)₹ 10 Crores

(D)₹ 12.5 Crores

The EBIT of a firm is ₹ 1,25,000. It consist of 8% Bank loan of ₹ 5 Lakh, 10% Preference share capital of ₹ 2 Lakh and 30000 Equity shares of ₹ 10 each. If applicable income tax rate is 30%, Earning per share will be ( ₹ ) :

(A)1.25

(B)1.32

(C)1.98

(D)1.56

What will be the rate of interest on calls-in-advance in the absence of any provision in the Articles of Association of a company ?

(A)12% per annum

(B)Rate decided by the Annual General Meeting

(C)Any rate decided by the Board of Directors

(D)Rate decided by the Board of Directors subject to a maximum of 12% per annum

Rule 12 of the Companies (Share Capital and Debentures) Rule, 2014 is related to ...................... .

(A)Issue of sweat equity shares

(B)Issue of right shares

(C)Employee stock option plan

(D)Buy-back of shares and other securities

At the time of forfeiture of shares the share capital account is debited with :

(A)Face value

(B)Called up value

(C)Paid up value

(D)Issued value

Pro-rata allotment of shares is made when there is :

(A)Under subscription

(B)Over subscription

(C)Equal subscription

(D)As and when desired by directors

ABC Ltd. issued 10,000 equity shares of ₹ 100 each at par payable as under :

On application ₹ 30; on allotment ₹ 20; on first and on final call ₹ 50 per share.

Applications were received for 30,000 shares.

Applications for 5,000 shares were rejected and pro-rata allotment was made to the applicants for 25,000 shares. Excess application money is adjusted towards amount due on allotment and calls.

How much amount will be received in cash on first call ?

(A)₹ 1,00,000

(B)₹ 1,50,000

(C)₹ 2,00,000

(D)₹ 2,50,000

The company shall not issue sweat equity shares for more than……..of the existing paid up equity share capital in a year or shares of the issue value of rupees ........................ whichever is higher.

(A)5%, 1 Crore

(B)10%, 2 Crore

(C)15%, 5 Crore

(D)20%, 10 Crore

A Ltd. paid ₹ 9,00,000 for 70% of equity in B Ltd. on 1st April, 2019. On this date B Ltd. had share capital of ₹ 10,00,000 and retained earnings of ₹ 5,00,000. All of the assets and liabilities of B Ltd. were recorded at fair value. A Ltd. interest in the B Ltd. would be:

(A)₹ 6,30,000

(B)₹ 7,00,000

(C)₹ 10,50,000

(D)₹ 15,00,000

In case of buy back of own shares, a company shall make a public announcement within two working days from the date of special resolution/ Board of directors resolution in :

(A)at least one English National Daily, one Hindi National Daily and two Regional language daily

(B)at least one English National Daily, one Hindi National Daily and one Regional language daily

(C)at least one English National Daily, two Hindi National Daily and one Regional language daily

(D)at least two English National Daily, one Hindi National Daily and one Regional language daily

ABC Ltd. issued 1,00,000 equity shares of ₹ 100 each, payable as under :

On application ₹ 30; On allotment ₹ 30, On final call ₹ 40 1,45,000 applications were received as under :

Applicants applied for 25,000 shares, allotted full.

Applicants applied for 1,00,000 shares, allotted 75,000 shares on pro-rata basis.

Remaining applications were rejected.

Amount received at the time of application is .................

(A)₹ 50,00,000

(B)₹ 43,50,000

(C)₹ 37,50,000

(D)₹ 25,00,000

In the question number of 49 , how much excess money received on application:

(A)₹ 13,50,000

(B)₹ 30,00,000

(C)₹ 27,50,000

(D)₹ 15,00,000

In the question number of 49 , amount to be refunded ................... .

(A)₹ 3,50,000

(B)₹ 4,50,000

(C)₹ 5,00,000

(D)₹ 6,00,000

In the question number of 49 , amount of excess application money available for adjustment against allotment money ............ .

(A)₹ 7,50,000

(B)₹ 13,50,000

(C)₹ 15,50,000

(D)₹ 17,50,000

Proprietary Funds is ................

(A)Equity share capital + Preference share capital + Reserves

(B)Equity share capital + Preferene share capital

(C)Equity share capital + Preference share capital + Reserves – Fictitious Assets

(D)Equity share capital + Preference share capital + Reserves + Fictitious Assets

ABC Ltd. paid up share capital is ₹ 10 lakh of 2.00 lakh equity shares (Dividend paid @ 5% per equity) and 10% preference share capital 50 lakh. Income tax @ 40% and term loan from SBI ₹ 2 crore @ 15% interest per annum. EBIT for the year is :

(A)55 lakh

(B)48.00 lakh

(C)52 lakh

(D)54.00 lakh

Paid-up equity shares capital of Novel Ltd. is ₹ 50,00,000 having face value of ₹ 10 each fully paid-up. Other details :

General Reserve = ₹ 15,00,000

Capital Redemption Reserve = ₹ 4,00,000

Profit & Loss Account = ₹ 1,00,000

Statutory Reserve = ₹ 6,40,000

Securities Premium = ₹ 1,00,000 The board of directors passed resolution in board meeting to buy back maximum number of shares as allowed by law. What is the maximum no. of shares that can be bought back ?

(A)55,000 shares

(B)67,000 shares

(C)1,25,000 shares

(D)78,000 shares

Negi Ltd. had 90,000 equity shares of ₹ 100 each, fully paid up. The company decided to buy back 10% shares at par by the issue of sufficient number of preference shares. Company do not have any reserves. How much preference shares are required to be issued, if new preference shares are to be issued at ₹ 10 each ?

(A)9,00,000 shares

(B)90,000 shares

(C)1,00,000 shares

(D)1,20,000 shares

According to section 52 of the Companies Act, 2013, the amount in the Securities Premium A/c cannot be used for the purpose of :

(A)Issue of fully paid bonus shares

(B)Writing off losses of the company

(C)For purchase of own securities

(D)Writing off commission or discount on issue of shares

Preference shares amounting to ₹ 2,00,000 are redeemed at a premium of 5% by issue of equity shares amounting to ₹ 1,00,000 at a premium of 10%. What is the amount to be transferred to capital redemption reserve ?

(A)₹ 1,05,000

(B)₹ 1,00,000

(C)₹ 2,00,000

(D)₹ 1,11,000

.............. are shares issued by a company free of cost to its existing shareholders.

(A)Right shares

(B)Bonus shares

(C)Stock options

(D)Warrants

........... refers to that part of the authorized capital which has actually been offered to the public for subscription.

(A)Called up capital

(B)Subscribed capital

(C)Issued capital

(D)Nominal or authorized capital

Premium on issue of shares must be treated as ........................

(A)Revenue Receipt

(B)Deferred Revenue Receipt

(C)Capital Receipt

(D)Capital Loss

Premium on issue of shares must be credited to a separate account called ..................

(A)Share Premium Account

(B)Securities Premium Account

(C)Discount on Issue of Shares

(D)Securities Profit Account

Amount received as calls-in-advance is a ................ of the company.

(A)right

(B)asset

(C)debt

(D)revenue

Amount due on calls made but not paid is known as .....................

(A)Calls-in-Advance

(B)Calls-in-Arrear

(C)Unpaid amounts

(D)Defaulting amounts

............... may be said to be the compulsory termination of membership by way of penalty for non-payment of allotment and/or any call money.

(A)Surrender of shares

(B)Forfeiture of shares

(C)Transfer of shares

(D)Transmission of shares

Which of the following is correct?

(A)The company shall not issue sweat equity shares for more than 15% of the existing paid up equity share capital in a year or shares of the issue value of rupees five crore, whichever is higher.

(B)The company shall not issue sweat equity shares for more than 15% of the existing paid up equity share capital in a year or shares of the issue value of rupees 5 crore, whichever is lower.

(C)The company shall not issue sweat equity shares for more than 25% of the existing paid up equity share capital in a year or shares of the issue value of rupees 5 crore, whichever is higher.

(D)The company shall not issue sweat equity shares for more than 25% of the existing paid up equity share capital in a year or shares of the issue value of rupees 5 crore, whichever is lower.

If the Articles of Association are silent regarding interest on calls-in-arrears, the minimum rate of interest which can be charged on calls-in-arrears is :

(A)12% p.m.

(B)10% p.a.

(C)12% p.a.

(D)None of the above

The maximum amount of capital a company can issue is called .............

(A)Issued Capital

(B)Paid up Capital

(C)Authorized Capital

(D)Called up Capital

Share Options Outstanding Account will be shown in the Balance Sheet of a company under the heading

(A)Share Capital

(B)Reserves & Surplus

(C)Non-current Liabilities

(D)Current Liabilities

C Ltd. invited applications for the issue of 20 Lakh equity shares of ₹ 10 each payable ₹ 3 on application and ₹ 7 on allotment. Applications were received for 35 Lakh equity shares. Applications for 7 Lakh shares were rejected and prorata allotment was made to remaining applicants. Excess application money was adjusted on the sums due on allotment. Ravi could not pay allotment money on his 2500 allotted shares. The amount received on allotment will be :

(A)₹ 1,39,92,500

(B)₹ 1,15,92,500

(C)₹ 1,04,86,880

(D)₹ 1,15,85,500

Rule 17 of the Companies (Share Capital and Debenture) Rule, 2014, is related to :

(A)Issue of right shares

(B)Buy-back of shares or other securities

(C)Issue of sweat equity shares

(D)Employee stock option plan

The term ‘Calls in Arrears’ is shown in the company’s balance sheet :

(A)Under current liabilities

(B)Under current assets, loans and advances

(C)As deducted from called up capital

(D)Non-current liabilities

(e)The following information is extracted from the Balance Sheet of Chika Ltd. as at 31st March, 2019 :

You are required to make the presentation of above information in the Relevant notes to the accounts for the year ended as at 31s« March, 2019 as per Schedule III of the Companies Act, 2013. The Relevant notes should be related to :

(1)Reserves and surplus

(2)Non-current liabilities, and

(3)Current liabilities.

(b)Titanic Ltd. issued 10,000 equity shares at ₹ 20 per share for cash and 20,000 equity shares to supplier of plant costing ₹ 4,50,000. Assuming face value of shares at ₹ 10 each, show the resultant disclosure in the notes to accounts attached to balance sheet as per Schedule III of the Companies Act, 2013.

(e)The following balances were stood in the Balance Sheet of Gauru Ltd. as on 31st March, 2018 :

(i)Share capital—Issued and subscribed : 2,00,000, 9% Preference shares of ₹ 100 each fully paid : ₹ 200 lakh 50,00,000 Equity shares of ₹ 10 each fully paid : ₹ 500 lakh

(ii)Reserves and surplus : Capital Reserve ₹ 40,00,000 (created due to revaluation of fixed assets) Securities Premium ₹ 60,00,000 General Reserve ₹ 35,00,000 Surplus (Statement of Profit & Loss) ₹ 80,00,000 On 1st April, 2018 the company decided to capitalise its reserves by way of issue of bonus shares at the rate of one equity share for every four equity shares held. Show necessary journal entries in the books of the company.

(i)The following balances are extracted from the books of Raj Ltd. : ₹

The directors redeemed the preference shares at a premium of 10% and for that purpose made a fresh issue of equity shares at par for such an amount as was necessary for the purpose after utilising the available sources to the maximum extent. Pass the necessary journal entries in the books of the company.

(iii)The following balances are obtained from the Balance Sheet of Pimo Ltd. as on 31st March, 2018 :

(1)Shareholders’ funds :

( ₹ in lakh)

(a)Issued and subscribed share capital :

(b)Reserves and Surplus :

On 1st April, 2018 the shareholders of the company have approved the scheme of buy-back of equity shares as under :

(a)10% of the equity shares would be bought back at ₹ 25 per share.

(b)Investment would be sold for ₹ 35 lakh.

(c)Premium on buy-back of shares should be met from securities premium account.

Pass necessary journal entries to record the above transactions.

(a)X applied for 2,000 shares of ₹ 10 each at a premium of ₹ 2.50 per share. He was allotted 1000 shares. After having paid ₹ 3 per share on application, he did not pay the allotment money of ₹ 4.50 per share (including premium) and on his subsequent failure to pay the first call of ₹ 2 per share, his shares were forfeited.

These shares were reissued @ ₹ 8 per share credited as fully paid-up.

Pass Journal entries to record forfeiture and reissue of shares.

X applied for 2,000 shares of ₹ 10 each at a premium of ₹ 2.50 per share. He was allotted 1,000 shares. After having paid ₹ 3 per share on application, he did not pay the allotment money of ₹ 4.50 per share (including premium) and on his subsequent failure to pay the first call of ₹ 2 per share, his shares were forfeited. These shares were reissued @ ₹ 8 per share credited as fully paid-up.

Calculate the amount of Securities Premium Reserve Account to be debited at the time of forfeiture of shares, assuming excess received at the time of application is first to be adjusted against share capital account.

(A)₹ 1,500

(B)₹ 1,000

(C)₹ 4,500

(D)₹ 2,500

On the basis of Question No. 13, calculate the amount to be debited to Shares Forfeiture Account at the time of reissue of Forfeited Shares.

(A)₹ 1,500

(B)₹ 2,000

(C)₹ 8,000

(D)₹ 1,000

On the basis of Question No. 13, calculate the amount of gain transferred to capital Reserve after reissue of forfeited shares.

(A)₹ 1,500

(B)₹ 2,000

(C)₹ 3,000

(D)₹ 5,000

A company forfeited 100 equity shares of ₹ 100 each on which a final call of ₹ 4 per share was unpaid. At what minimum rate/ amount per share, these shares can be issued by the company ?

(A)₹ 6

(B)₹ 4

(C)₹ 8

(D)₹ 10

( a )Campa Ltd. issued 4,00,000 shares of ₹ 50 each at a premium of ₹ 15 per share. Application for 4,50,000 shares was received. The amount was payable as follows :

l On Application ₹ 15

l On Allotment ₹ 16 (including premium ₹ 6)

l On First Call ₹ 20 (including premium ₹ 5)

l On Final Call ₹ 14 (including premium ₹ 4)

(1)Alpha, who was allotted 6000 shares did not pay allotment and first call and thereafter his shares were forfeited.

(2)Beta, who was allotted 4000 shares did not pay first call and thereafter his shares were forfeited.

(3)Gama, who was allotted 15000 shares did not pay flnal call and thereafter his shares were forfeited.

Half of the shares of Alpha and Beta were reissued at ₹ 42 You are required to pass journal entries for the forfeiture and reissue of shares.

The net profit on forfeiture and reissue of equity shares is transferred to .............. .

(A)Capital Reserve

(B)General Reserve

(C)Dividend Equalization Reserve

(D)Revaluation Reserve

At the time of forfeiture of shares, the share capital account will be ................... .

(A)Debited with paid up value of shares forfeited

(B)Debited with called up value of shares forfeited

(C)Debited with face value of shares forfeited

(D)Debited with issue price of shares forfeited

(c)Zedux Ltd. decided to issue 60,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount on shares was payable as follows :

Applications were received for 1,00,000 shares. Shares were allotted on a pro rata basis. Walter was allotted 1,000 shares. Walter did not pay the allotment money and subsequent calls. Walter’s shares were forfeited.

Pass the necessary journal entries.

PV Ltd. issued 40,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The shares were payable as ₹ 2 on application, ₹ 5 on allotment (including premium) and ₹ 5 on call. All the shares were applied for and allotted. All monies were received with the exception of the call money on 1000 shares which were forfeited. If 400 of these shares were re-issued as fully paid @ ₹ 8 per share, the amount transferrable to Capital Reserve Account is :

(A)₹ 1,200

(B)₹ 2,000

(C)₹ 4,200

(D)₹ 5,000

(a)Pass the necessary journal entries to record the above transactions.

Profit on Re-issue of forfeited shares is a profit of a capital nature and, hence, it should be credited to....................

(A)Capital Reserve

(B)Capital Redemption Reserve

(C)Revaluation Reserve

(D)General Reserve

A company invited applications for 50,000 shares of ₹ 10 each at a premium of ₹ 2 per share, payable as ₹ 3 on application, ₹ 5 on allotment (including premium) and the balance on call. Applications for 80,000 shares were received, of which applications for 5,000 shares were rejected and the money was returned. Allotment was made pro-rata to the remaining applicants and the excess application money being used towards the allotment. R, to whom 200 shares were allotted failed to pay the amount due on allotment and call. If his shares were forfeited and reissued at the rate of ₹ 11 per share, then the amount transferred to capital reserve account would be :

(A)₹ 300

(B)₹ 600

(C)₹ 900

(D)₹ 200

The maximum amount of discount on re-issue of forfeited shares shall be ................. .

(A)Not exceeding the called-up amount of shares

(B)Equal to or exceeding the forfeited amount

(C)Not exceeding the amount credited to Shares Forfeited Account

(D)Amount of premium received on original issue of shares

X applied for 200 shares of ₹ 10 each in ABC Ltd., but he was allotted only 160 shares. After having paid ₹ 1 on application he did not pay the allotment money of ₹ 2 per share and first call money of ₹ 3 per share. His shares were forfeited. What amount will be credited to share allotment account at the time of entry for forfeiture ?

(A)₹ 400

(B)₹ 320

(C)₹ 280

(D)₹ 800

P Ltd. has a total subscribed capital of ₹ 10,00,000 in equity shares of ₹ 10 each of which ₹ 7.50 were called up. A final call of 2.50 was made and all amounts paid except the two calls of ₹ 2.50 each in respect of 200 shares held by A. These shares were forfeited and re-issued at ₹ 8.00 per share. What amount will be transferred to capital reserve account on re-issue of forfeited shares ?

(A)₹ 500

(B)₹ 600

(C)₹ 1,000

(D)₹ 1,600

Govind is the holder of 200 shares of ₹ 10 each. He had paid on these shares application money of ₹ 2 each, allotment money of ₹ 2 each and first call money of ₹ 3 each. He has failed to pay the final call amount, hence all his holdings were forfeited. Out of them 100 shares were re-issued at ₹ 11 each. The amount to be transferred to Capital Reserve Account would be :

(A)₹ 1,400

(B)₹ 1,500

(C)₹ 800

(D)₹ 700

A Ltd. forfeited 1,000 shares of ₹ 10 each fully called up for non-payment of first & final call of ₹ 3 per share. 600 of these shares were reissued at ₹ 9 per share, fully paid up. What is the amount to be transferred to Capital Reserve Account?

(A)₹ 7,000

(B)₹ 4,200

(C)₹ 6,400

(D)₹ 3,600

Which of the following is capital reserve ?

(A)Profit prior to incorporation

(B)Profit on sale of fixed assets

(C)Profit on reissue of forfeited shares

(D)All of the above

A company has a subscribed capital of 2,00,000 equity shares of ₹ 25 each, ₹ 20 per share called up. The directors forfeited 200 equity held by a shareholder who failed to pay the first call made @ ₹ 10 per share. Later, the directors reissued these shares as ₹ 20 per share paid up at ₹ 15 per share. On reissue, amount to be transferred to capital reserve account is ....................

(A)₹ 1,000

(B)₹ 1,400

(C)₹ 1,500

(D)₹ 1,100

Financial Management is mainly concerned with :

(A)Acquiring and developing assets to forfeit its overall benefit

(B)Acquiring, financing and managing assets to accomplish the overall goal of a business enterprise

(C)Efficient management of the business

(D)Sole objective of profit maximisation

Forfeited shares can be re-issued at ..........

(A)Par

(B)Premium

(C)Discount

(D)Any of the above

Shiva Ltd. forfeited 4,500 equity shares of ₹ 10 each (which are issued on 40% pro-rata (basis) for non-payment of allotment @ ₹ 6 (including premium of ₹ 2.50) and first and final call ₹ 3 per share. If the excess money received on application is used for receiving the amount due as securities premium, what amount should be credited to ‘Shares Forfeited Account’ ?

(A)₹ 15,750

(B)₹ 28,125

(C)₹ 39,375

(D)₹ 13,500

P Ltd. forfeited 5,000 equity shares of ₹ 10 each for non-payment of first and final call of ₹ 2.50 per share which were issued at a premium of ₹ 3 per share receivable at allotment. Out of these, 3,200 shares are re-issued at ₹ 8 per share as fully paid up. The amount transferred to Capital Reserve will be :

(A)₹ 37,500

(B)₹ 31,100

(C)₹ 24,000

(D)₹ 17,600

At the time of forfeiture of shares the share capital account will be :

(A)Debited with paid up value of share forfeited

(B)Debited with called up value of shares forfeited

(C)Debited with face value of shares forfeited

(D)Debited with issue price of shares forfeited

The loss/discount on re-issue of forfeited shares may be :

(A)Equal or exceed the forfeited amount

(B)Not exceed the forfeited amount

(C)Equal to amount of premium which were received at the time of original issue

(D)Not exceed the called up value of shares

When the forfeited shares were originally issued at premium, the maximum permissible discount on re-issue shall be :

(A)The amount of premium at time of original issue

(B)The amount credited to forfeited shares account

(C)The face value of forfeited shares

(D)The called up value of forfeited shares

Z Ltd. issued 5,000 equity shares of ₹ 10 each at 10% premium which is payable on allotment. The company received application money @ ₹ 3 per share and allotment money received on only 4,500 shares @ ₹ 4 per share. The company forfeited 500 shares for non-payment of allotment money.

At the time of forfeiture, the Equity Shares Capital a/c will be :

(A)Debited with ₹ 5,000

(B)Debited with ₹ 3,500

(C)Debited with ₹ 3,000

(D)Credited with ₹ 3,500

(a)During the course of the meeting of Board of directors' of Yana Ltd., it has been decided to forfeit the 500 shares held by Aasha on account of non-payment of the call amount of ₹ 4 per share. It has been informed that the face value and the called up value per share is ₹ 10. Based on the resolution passed in the meeting of Board of directors, shares of Aasha have been forfeited. In turn, 300 forfeited shares are reissued at the rate of ₹ 9 per share. You are required to pass the journal entries in the books of Yana Ltd.

(a)B Ltd. forfeited 2000 equity shares of ₹ 10 each, ₹ 8 called up for non-payment of first call money of ₹ 2 each. The company has already received ₹ 2 on application and ₹ 4 on allotment on these shares. Out of the shares forfeited, 1500 shares were re-issued at ₹ 7 per share as showing ₹ 8 paid up.

Journalize the above transactions in the books of the company.

(a)The Summary Balance Sheet of ABC Ltd. as on 3lst March, 2025 read as under :

The Annual General Meeting of ABC Ltd, it was resolved that :

(a)To issue one bonus share for every four shares held.

(b)To give option to existing shareholders to be purchased one share of ₹ 10 at a premium of ₹ 5 for every four share held (held prior to the bonus distribution), this option being taken up by all shareholders.

(c)To repay the debentures at a premium of 3%. You are requested to pass necessary journal entries and after completion of these transactions, prepare the Balance Sheet of ABC Ltd. as per Company Act 2013.

( a )The summarised Balance Sheets of H Ltd. and S Ltd. as on 31st March, 2025 is given below :

S Ltd. had reserves of ₹ 1,80,000 when H Ltd. acquired shares in S Ltd. The P & L balance of S Ltd. was fully earned after the acquisition of shares by H Ltd. S Ltd. decided to issue bonus shares out of post-acquisition profit in the ratio of 1 share for every 10 shares held.

Calculate the cost of control before and after issue of bonus shares.

(iii)Write a short note on issue of bonus shares. Provide proforma journal entries.

(b)The summarized balance sheet of H Ltd. and S Ltd. as on 31 March, 2023 are given below :

S Ltd. had reserves of ₹ 6,00,000 when H Ltd. acquired shares in S Ltd. but P & L balance was fully earned after the purchase of shares by H Ltd.

S Ltd. decided to issue bonus shares out of the post-acquisition profits in the ratio of 1 share for every 5 shares held.

(i)Calculate cost of control before issue of bonus shares and after issue of bonus shares.

(ii)What will be the journal entry passed in the books of S Ltd. and H Ltd. on issue of bonus shares by S Ltd ?

Which of the following items are taken into account while preparing Cash Flow Statement under AS-3 ?

(i)Bonus issue of shares

(ii)Dividend received

(iii)Surplus on revaluation of non-current assets

(iv)Accumulated profit

(v)Proposed dividend

(A)(ii), (iii), (v)

(B)(ii)

(C)(i), (ii), (iv), (v)

(D)(ii), (iv), (v)

Issue of bonus shares is a nature of :

(A)Cash Dividend

(B)Bond Dividend

(C)Property Dividend

(D)None of the above

A company cannot issue bonus shares to its members :

(A)In lieu of dividend

(B)When shares are partly paid-up

(C)When it is not authorized by its articles

(D)All of the above

S Ltd. has a capital of ₹ 4,00,000 in shares of 100 each, out of which H Ltd. purchased three-fourths of the shares at ₹ 4,80,000. The profit of S Ltd. at the time of purchase of shares by H Ltd. was ₹ 1,20,000. If S Ltd. decided to make a bonus issue out of pre-acquisition profits, of one share for every five shares held, the cost of control after the issue of bonus shares would be :

(A)₹ 1,80,000

(B)₹ 1,50,000

(C)₹ 1,20,000

(D)₹ 90,000

Bonus shares cannot be issued by a company out of ................... .

(A)Free reserves account

(B)Capital redemption reserve account

(C)Securities premium account

(D)Revaluation reserve account

If company makes bonus issue at 2 : 3, then it means :

(A)For every two shares three bonus shares will be allotted

(B)For every three shares two bonus shares will be allotted

(C)For every five shares three bonus shares will be allotted

(D)For every five shares two bonus shares will be allotted

No issue of bonus shares shall be made by a company out of :

(A)Its free reserves

(B)The securities premium account

(C)Capitalizing reserves created by revaluation of assets

(D)The capital redemption reserve account

Which of the following will not have an impact on a firm’s treasury position ?

(A)Dividend payment

(B)Tax payment

(C)Buying fixed assets

(D)Issuing bonus shares

When a company purchases its own shares out of free reserves, then a sum equal to the nominal value of the shares so purchased shall be transferred to the :

(A)Capital Reserve Account

(B)Capital Redemption Reserve Account

(C)General Reserve Account

(D)Profit and Loss Account

Which among the following is not relevant while calculating the cost of the redeemable preference shares ?

(A)Profit available with the firm

(B)Flotation cost

(C)Discount on issue/redemption

(D)None of the above

( a )Rainbow Ltd. has issued 10,000, 12% redeemable preference shares (Face value ₹ 1,000 each).

The shares are to be redeemed at a premium of 20%. The redemption proceeds will be raised through issue of equity share capital. Number of equity shares to be issued are 50,000 shares of 10 each at ₹ 240 a share.

The whole amount is received and paid out towards redemption of preference share capital.

Pass the necessary journal entries.

When a company purchases its own shares out of free reserves, a sum equal to the .......... of the shares so purchased shall be transferred to the Capital Redemption Reserve Account.

(A)Nominal Value

(B)Market Value

(C)Purchase Price

(D)Highest value of the above three

G Ltd. wants to issue Redeemable Preference Shares to mobilize funds to carry out an airport development project. In this case, what should be the maximum redemption period ?

(A)20 years

(B)25 years

(C)30 years

(D)No time limit for redemption

Which of the following cannot be used for the purpose of creation of capital redemption reserve account ?

(A)Profit and Loss A/c (credit balance)

(B)General Reserve A/c

(C)Dividend Equalization Reserve A/c

(D)Unclaimed Dividends A/c

Capital Redemption Reserve Account may be applied to issue ...................

(A)Right shares

(B)Bonus debentures

(C)Bonus to employees of the company

(D)Bonus shares

J Ltd. had 3,000, 12% Redeemable Preference Shares of ₹ 100 each, fully paid up. The company issued 25,000 equity shares of ₹ 10 each at par and 1,000 14% Debentures of ₹ 100 each. The amount to be transferred to Capital Redemption A/c will be .....................

(A)Nil

(B)₹ 50,000

(C)₹ 2,00,000

(D)₹ 3,00,000

For the companies whose financial statements comply with the accounting standards as prescribed in Section 133 of the Companies Act, 2013, the premium payable on redemption of preference shares shall be provided out of :

(A)the profits of the company only

(B)the securities premium only

(C)any of either profits of the company or securities premium

(D)none of the above

The Capital Redemption Reserve Account may be used by the company :

(A)In the issue of fully paid-up bonus shares

(B)In conversion of partly paid-up shares into fully paid-up

(C)In writing off the preliminary expenses of the company

(D)In distribution of dividend among shareholders

Varun Ltd. is issuing 1 Lakh 12% Irredeemable preference shares of the face value of ₹ 100 each. If the floatation cost is ₹ 2 per share, what is the cost of these Preference Shares ?

(A)12.00%

(B)12.14%

(C)12.24%

(D)12.34%

LMN Ltd. allotted 20,000 shares to the applicants of 28,000 shares on pro-rata basis. The amount payable on application is ₹ 25 per share. Kanika applied for 700 shares, the number of shares allotted to Kanika will be :

(A)500 shares

(B)700 shares

(C)800 shares

(D)900 shares

A Ltd. has 20,00,000 outstanding equity shares of ₹ 100 each. What is the provision for the issue of sweat equity shares and how many sweat equity shares can be issued by A Ltd. ?

(A)A company can issue 15% of the outstanding equity shares capital in a year or ₹ 5 crore w.e.h., A Ltd. can issue ₹ 5 crore equity shares as sweat equity

(B)A company can issue 15% of the outstanding equity shares capital in a year or ₹ 2 crore w.e.h., A Ltd. can issue ₹ 3 crore equity shares as sweat equity

(C)A company can issue 10% of the outstanding equity shares in a year or ₹ 5 crore w.e.h., A Ltd. can issue ₹ 5 crore equity shares as sweat equity

(D)A company can issue 10% of the outstanding equity shares capital in a year or ₹ 2 crore w.e.h., A Ltd. can issue ₹ 2 crore equity shares as sweat equity

As per Sec. 54 of the Companies Act, 2013, a company can issue sweat equity shares of a class of shares already issued only after ..................... from the date of commencement of business.

(A)One year

(B)Two years

(C)Three years

(D)180 days

The notice relating to offer for right issue shall be dispatched through registered post or speed post or through electronic mode to all the existing shareholders at least ....... before the opening of the issue.

(A)3 days

(B)5 days

(C)7 days

(D)10 days