Accounting for share Capital Class 12 Accountancy Extra Questions

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CBSE Class 12 Accountancy Important Questions

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Accountancy Extra Questions for Class 12

1. Entry for reissue of forfeited shares at discount will be
   1. Bank A/c Dr.
      Share Forfeiture A/c Dr.
      To Share Capital A/c
   2. Bank A/c Dr.
      To Share Capital A/c
   3. Share Capital A/c Dr.
      Share Forfeited A/c Dr.
      To Bank A/c
   4. Bank A/c Dr.
      Share Capital A/c Dr.
      To Share Forfeited A/c
2. Which of the following is not true about a private company?
   1. Restriction on the right to transfer its shares
   2. Private company ends with the words ‘Private Limited’.
   3. Minimum paid up share capital Rs.1,00,000
   4. Minimum paid up capital is 5,00,000
3. _______ Shares are not convertible.
   1. Equity Shares
   2. Convertible Preference Shares
   3. Both Preference Shares and Convertible Preference Shares
   4. Preference Shares
4. In the situation of _________, a company do not reject any application
   1. Oversubscription
   2. Uncalled share capital
   3. Under subscription
   4. Both Oversubscription and Uncalled share capital
5. What type of shares can be issued at discount?
   1. Both Preference Shares and Equity Shares
   2. Sweat Equity Shares
   3. Equity Shares
   4. Preference Shares

6. What amount of profit on reissue will be transferred to Capital Reserve under the following situations?

   1. Z Ltd. forfeited 800 equity shares of Rs. 10 each issued at a discount of 10% for the non-payment of first and final call of Rs. 3 per share. The forfeited shares were reissued at Rs. 12 per share as fully paid-up.
   2. 3,000 shares of Rs. 10 each of Rakesh was forfeited by crediting Rs 5,000 to Forfeited Shares Account. Out of these, 1,800 shares were reissued to Mohan for Rs. 9 per share fully paid-up.
   3. Z Ltd. forfeited 20 shares of Rs 100 each 60 called-up issued at par to Shiv on which he paid Rs. 20 per share. Out of these, 15 shares were reissued to Rajesh as Rs. 60 paid-up for Rs. 45 per share.

7. What do you mean by Forfeiture of shares?

8. What is Preferential Allotment?

9. Give the definition of a company as contained in the companies act,1956.

10. Can a company issue share of discount? What conditions must a company comply with before the issue of such shares.

11. DN Ltd issued 50,000 shares of Rs. 10 each payable as Rs. 2 per share on application, Rs. 3 per share on allotment and Rs. 5 on first and final call. Applications were received for 70,000
    shares. It was decided that

    1. Refuse allotment to the applicants of 10,000 shares.
    2. Allot 20,000 shares to Mohan who had applied for similar number.
    3. Allot the remaining shares on pro-rata basis.

    Mohan failed to pay the allotment money and Sohan who belonged to the category (iii) and was allotted 3,000 shares paid both the calls with allotment. Calculate the amount received on allotment.

12. The authorised capital of Suhani Ltd is Rs. 45,00,000 divided into 30,000 shares of Rs. 150 each. Out of these, company issued 15,000 shares of Rs. 150 each at a premium of Rs. 10 per share. The amount was payable as follows: Rs. 50 per share on application, Rs. 40 per share on allotment (including premium), Rs. 30 per share on first call and balance on final call. Public applied for 14,000 shares. All the money was duly received.

    Prepare an extract of balance sheet of Suhani Ltd as per Revised Schedule III, Part I of the Companies Act, 2013 disclosing the above information. Also prepare ‘notes to accounts’ for the same.

13. Y Ltd. forfeited 1,500 shares of Rs. 10 each (Rs. 7 called-up) for non-payment of the allot money of Rs. 4 per share including Rs. 1 as premium. Of these 1,000 shares were reissue M at per share as Rs. 7 called-up. Journalise the above transactions in the books of Y.

14. Kayafab Ltd. issued 1,00,000 equity shares of Rs. 10 each payable as Rs. 2 on application; Rs. 4 on allotment and Rs. 2 each on first and final call. Applications were received for 1,50,000 shares. Applicants of 50,000 shares were sent letters of regret and application money was refunded Madhur, a holder of 3,000 shares failed to pay allotment money which he paid along with the first call. Rohan, a shareholder holding 700 shares paid both the calls along with allotment. Sohan, a holder of 1,000 shares did not pay the first call and the final call. His shares were forfeited. The forfeited shares were reissued at Rs. 11 per share as fully paid-up.
    Pass necessary journal entries for the above transactions in the books of the company.

15. AB Ltd. invited applications for issuing 75,000 equity shares of Rs. 100 each at a premium of t 30 per share. The amount was payable as follows
    On application and allotment — Rs. 85 per share
    On first and final call — The balance amount.
    Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and shares were allotted on pro-rata basis to the remaining applicants. Excess 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 1,000 shares, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs. 150 per share fully paid up.
    Pass necessary journal entries for the above transactions in the books of AB Ltd.

Ch-7 Accounting for share Capital

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Answer

1. 1. Bank A/c Dr.
      Share Forfeiture A/c Dr.
      To Share Capital A/c
      Explanation: Bank account is debited with the amount received on reissue. Share capital is credited with face value of shares reissued and share forfeiture account is debited with the amount of loss on reissue.
   4. Minimum paid up capital is 5,00,000
      Explanation: Minimum paid up capital of a private company is 1,00,000. A private company cannot transfer its shares and all private companies’ ends with the words ‘Private Limited’.
   1. Equity Shares, Explanation: Equity Shares are not convertible. Preference shares can be converted into equity shares depend upon the terms and conditions.
   3. Under subscription, Explanation: Under subscription is a situation where number of shares applied are less than the shares offered for the subscription. In this case normally companies do not reject any application.
   2. Sweat Equity Shares, Explanation: As per the Companies Act, 2013, A company cannot issue its shares at discount except sweat equity shares.
   1. Amount to be transferred to share forfeiture A/c= 7,200(800 x 9) – 2,400(800 x 3)= Rs. 4,800
      Amount to be transferred to Capital Reserve A/c= 9,600(12 x 800) – 4,800(Amount of share forfeiture)= Rs. 4,800
   2. Amount to be transferred to share forfeiture A/c= Rs. 3,000(5,000 ÷ 3,000 x 1,800)
      Amount to be transferred to Capital Reserve A/c= 16,200(1,800 x 9) – 3,000(Amount of share forfeiture)= Rs. 13,200.
   3. Amount to be transferred to Capital Reserve A/c= 75
2. A fortified share in a company that the owner loses (forfeits) by failing to meet the purchase requirements. Requirements may include paying an allotment or call money owed, or avoid selling or transferring shares during a restricted period.
3. Preferential allotment is a process in which shares are allotted to specific group of people or companies which are interested in it on preferential basis.
4. A company is a body corporate or an incorporated business organization registered under the company’s act 1956. It can be limited or unlimited company, private or public company, company limited by guarantee or company having share capital, or a community interest company.
5. Section 79 of the Companies Act, 1956 permits a company to issue shares at a discount only if the following conditions are fulfilled :
   1. The shares are of a class already issued.
   2. Discount rate should not be more than 10%.
   3. At least one year must have been passed since the company become entitled to commence business.
   4. The issue of such shares must take place with in two months after the date of court’s sanction or within such extended time as the court may allow.
   5. The issue of shares at discount is authorised by a revolution passed by the company in its general meeting and sanctioned by the central Government.
      The resolution specifies the maximum rate of discount at which the shares are to be issued. The rate must not exceed 10% unless sanctioned by the Central Government.
6. Table Showing Allotment of Shares :
   

   Shares Applied	Shares Allotted
   (i) 10,000	Nil
   (ii) 20,000	20,000
   (iii) 40,000	30,000 (Pro-rata Allotment)
   70,000	50,000

   Table Showing Amount Received on Allotment :

   Calculation of Amount Received on Allotment	Amt (₹)
   Total Allotment money due on 50,000 shares (50,000 ×× 3)	1,50,000
   Less : Excess money received with application (40,000-30,000) ×× 2	( 20,000)
   	1,30,000
   Less : Money not paid by Mohan (20,000 ×× 3)	(60,000)
   	70,000
   (+) Calls-in-advance (Sohan) (3,000 ×× 5)	15,000
   Amount received on allotment	₹85,000

7. In the books of Suhani Ltd.Balance Sheet
   

   Particulars	Note No.	Rs.
   I. Equities & Liabilities
   1. Shareholder’s Fund
   (a) Share Capital	1	21,00,000
   (b) Reserve & Surplus	2	1,40,000

   Note to Account

   Particulars	Rs.
   1. Share Capital:
   (a) Authorized Share Capital:
   30,000 equity share @rs.150 each	45,00,000
   (b) Issued share capital:
   15,000 equity share @ rs.150 each	22,50,000
   (c) Subscribed & Fully Paid-up Share Capital:
   14,000 equity share @rs. 150 each	21,00,000
   2. Reserve & Surplus:
   Security Premium Reserve (14,000 equity shares @ Rs. 10 each)	1,40,000

8. In this question first shares are forfeited than reissued where Forfeiture of shares means the process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or installments of the issue price of his shares within a certain period of time after they fall due.In the Books of Y Ltd.
   Journal

   Date	Particulars		L.F.	Dr.(Rs.)	Cr.(Rs.)
   	Share Capital A/c (1,500××7)	Dr.		10,500
   	Securities Premium Reserve A/c (1,500××1)	Dr.		1,500
   	To Forfeited Shares A/c (1,500××4)				6,000
   	To Share Allotment A/c (1,500××4) (Being 1,500 shares forfeited for non-payment of allotment money)				6,000
   	Bank A/c (1,000××6)	Dr.		6,000
   	Forfeited Shares A/c (1,000××1)	Dr.		1,000
   	To Share Capital A/c (Being 1,000 shares reissued @ 6 per share as 7 called-up)				7,000
   	Forfeited Shares A/c	Dr.		3,000
   	To Capital Reserve A/c (Note) (Being the transfer of gain (profit) on reissue)				3,000

9. JOURNAL
   

   Date	Particulars	L.F	Amt (Dr)	Amt (Cr)
   	Bank A/c (1,50,000 ×× 2) Dr.		3,00,000	…
   	To Equity Share Application A/c		…	3,00,000
   	(Being application money received)		…	…
   	Equity Share Application A/c Dr.		3,00,000	…
   	To Share Capital A/c (1,00,000 ×× 2)		…	2,00,000
   	To Bank A/c (50,000 ×× 2)		…	1,00,000
   	(Being application money transferred to share capital account)		…	…
   	Equity Share Allotment A/c (1,00,000 ×× 4) Dr.		4,00,000	…
   	To Share Capital A/c		…	4,00,000
   	(Being allotment money due)		……	…
   	Bank A/c Dr.		3,90,800	…
   	To Equity Share Allotment A/c (97,000 ×× 4)		…	3,88,000
   	To Calls-in-advance A/c (700 ×× 2) + (700 ××2)		…	2,800
   	(Being allotment money received)		…	…
   	Equity Share First Call A/c (1,00,000 ×× 2) Dr.		2,00,000	…
   	To Share Capital A/c		…	2,00,000
   	(Being first call money due)		…	…
   	Bank A/c Dr.		2,08,600	…
   	Calls-in-advance A/c (700 ×× 2) Dr.		1,400	…
   	To Equity Share First Call A/c (99,000 ×× 2)		…	1,98,000
   	To Equity Share Allotment A/c (3,000 ×× 4)		…	12,000
   	(Being first call money received)		…	…
   	Equity Share Second and Final Call A/c (1,00,000 ×× 2) Dr.		2,00,000	…
   	To Share Capital A/c		…	2,00,000
   	(Being final call money due)		…	…
   	Bank A/c (98,300 ×× 2) Dr.		1,96,600	…
   	Call-in-advance (700 ×× 2) Dr.		1,400	…
   	To Share Second and Final Call A/c		…	1,98,000
   	(Being amount received on second and final call)		…	…
   	Equity Share Capital A/c (1,000 ×× 10) Dr.		10,000	…
   	To Share Forfeiture A/c (1,000 ×× 6)		…	6,000
   	To Equity Share First Call A/c (1,000 ×× 2)		…	2,000
   	To Equity Share Second Call A/c(1,000 ×× 2)		…	2,000
   	(Being shares forfeited)		…	…
   	Bank A/c (1,000 ×× 11) Dr.		11,000	…
   	To Share Capital A/c (1,000 ×× 10)		…	10,000
   	To Securities Premium Reserve (1,000 ×× 1)		…	1,000
   	(Being shares reissued @ Rs. 11 per share, fully paid-up)		…	…
   	Share Forfeiture A/c Dr.		6,000	…
   	To Capital Reserve A/c		…	6,000
   	(Being gain on reissue transferred to capital reserve)		…	…

   category	applied	alloted	share application	share capital	share allotment	bank
   A	1,00,000	1,00,000	3,00,000	3,00,000	————–
   B	50,000	——-	1,00,000	————		1,00,000
   Total	1,50,000	1,00,000	4,00,000	3,00,000	——————-	1,00,000

   share/call	application	allotment	1st call	2nd call
   Due	1,00,000 x 2=2,00,000	1,00,000 x 4=4,00,000	1,00,000 x 2=2,00,000	1,00,000 x 2=2,00,000
   Received	1,50,000 x 2=3,00,000 -1,00,000(Rejected)	4,00,000-(3000 x 4)calls in arrears +(700 x 4) calls in advances =3,90,800	2,00,000-(1,000 x 2)calls in arrears +12000(3000 x 4)allotment arrear received with first call	2,00,000-(1,000 x 2)calls in arrears =1,98,000

10. Working Note 1.
    

    Category	No of Shares Applied	No of shares Allotted	Excess amount received on Application	Amount to be received On First & Final Call	Amount to be adjusted on First & Final Call	Amount Refunded
    I	1,00,000	75,000	25,000 Shares××85 =21,25,000	75,000 shares ××45 =33,75,,000	21,25,000	–
    II	27,500	Nil	–	–	–	27500 Share ××Rs. 85 = 23,3,7500
    Total	1,27,500	75,000			21,25,000	23,37,500

    Working Note 2.
    No of shares Applied = 1000 shares
    No of shares Allotted = 1000 shares ×× 75,000 share /1,00,000 share = 750 shares
    Excess amount on share application received = ( 1000 – 750 ) 150 shares ×× Rs.85 = Rs.21250
    Amount to be received on Allotment = 750 shares ×× Rs.45 = Rs.33750
    Outstanding on allotment = Rs.33750 – Rs.21250 = Rs.12500
    Working Note 3.
    Amount transfer to Capital Reserve = 62500 – 0 = Rs.62500

    Journal

    Date	Particulars		L.F.	Debit ( Rs. )	Credit ( Rs. )
    1.	Bank A/c	Dr.		1,08,37,500
    	To Equity Share Application A/c				1,08,37,500
    	( Being Amount Received on the application of share @2 per share on 1,50,00 shares )
    2.	Equity Share Application A/c	Dr.		1,08,37,500
    	To Equity Share Capital A/c				41,25,000
    	To Security Premium Reserve A/c				22,50,000
    	To Equity shares First & Final A/c				21,25,000
    	To Bank A/c				23,37,500
    	( Being amount transfer to capital a/c and adjustment of pro-rata made.)
    3.	Equity Share First & Final call A/c	Dr.		33,75,000
    	To Equity share Capital A/c				33,75,000
    	( Being amount Due on 1st & Final Call Recorded )
    4.	Bank A/c	Dr.		12,50,000
    	To Equity Share First & Final call A/c ( 33,75,000 – 21,25,000 )				12,50,000
    	( Being Amount received on First and Final calls )
    7.	Equity Share Capital A/c	Dr.		75,000
    	To Equity Share Forfeited A/c				62,500
    	To Equity Share First & Final Call A/c				12,500
    	( Being shares forfeited on which amount of call not received )
    8.	Bank A/c	Dr.		1,12,500
    	To Equity Share Capital A/c				75,000
    	To Security Premium Reserve A/c				37500
    	( Being shares Forfeited on which amount of call not received )
    10.	Equity Share Forfeited A/c	Dr.		62500
    	To Capital Reserve A/c				62500
    	( Being amount of share forfeited transfer to Capital Reserve transfer A/c )

1. FS of Non profit Organisation
2. Fundamentals of partnership and Goodwill
3. Change in Profit sharing ratio of Partners
4. Admission of a Partner
5. Retirement or Death of a partner
6. Dissolution of Partnership
7. Accounting for share Capital
8. Accounting for Debentures
9. Financial Statements and Analysis
10. Statement Analysis Tools and Accounting Ratios
11. Cash Flow Statement