CBSE Class 12 Accountancy Share Capital Worksheet Set 02

Question. Companies Act is governed by
a) RBI
b) SEBI
c) Partnership Act
d) Ministry of Corporate Affairs

Answer : D

Question. A company in which there is only one member is called
a) one member company
b) one person company
c) single company
d) individual company

Answer : B

Question. Balance of share forfeiture account is shown in the balance sheet under the item
a) current liabilities and provisions
b) reserves and surpluses
c) share capital
d) unsecured loans

Answer : C

Question. Shares can be forfeited
a) for non-payment of call money
b) for failure to attend meetings.
c) for failure to repay the loan to the bank
d) for which shares are pledged as a security.

Answer : A

Question. Which of the following is the registered capital of the company?
a) Nominal capital
b) Authorised capital
c) Share capital
d) Both (a) and (b)

Answer : D

Question. The balance of share forfeiture account can be used to
a) provide for discount given at the time of reissue
b) write-off preliminary expenses
c) write-off bad debts
d) None of the above

Answer : A

Question. Capital which is called only at the time of winding-up of the company is called
a) capital reserve
b) reserve capital
c) secure capital
d) authorised capital

Answer : B

Question. Own shares purchased by a company with a view to reduce its capital is called
a) sale
b) purchase
c) buy-back
d) private placement

Answer : C

Question. Which kind of preference share entitles its holders to receive arrear of dividends of previous years?
a) Cumulative preference share
b) Non-cumulative preference share
c) Convertible preference share
d) Non-convertible dividend share

Answer : A

Question. A company issued 10,000 shares of Rs 10 each. Amount is payable as Rs 2 on application, Rs 5 on allotment and Rs 3 on first and final call. A shareholder who had 1,000 shares failed to pay allotment and first call amount on due date. After a month, he paid the due amount. What will be the amount received by company against issue of shares?
a) Rs 92,000
b) Rs 90,000
c) Rs 1,00,000
d) Rs 8,000

Answer : C

Question. Shareholders receive ……… from the company as a benefit against their investment.
a) interest
b) commission
c) profit
d) dividend

Answer : D

Question. Shares for consideration other than cash can be issued at
a) par
b) premium
c) discount
d) Both (a) and (b)

Answer : D

Question. If company wants to calculate amount forfeited on reissued shares, then which amongst the given formula will be used?
a) Total Amount Forfeited /Number of Share Forfeited
b) Total Amount Forfeited /Number of Shares
c) Number of Share Forfeited /Total Amount Forfeited × Share Re-issues
d) Total Amount Forfeited /Number of Share Forfeited × Number of Share Re-issued

Answer : D

Question. Shares which have preferential rights are called
a) equity share
b) preference share
c) debenture
d) bond

Answer : B

Question. Singh who was allotted 200 equity share of Rs 20 each by a company, failed to pay Rs 8 each on final call. Shares were re-issued to Kumar at Rs 20 each. What will be the journal entry on re-issue?
a) Bank A/c                                      Dr          4,000
           To Equity Share Capital A/c                              4,000
b) Equity Share Capital A/c                Dr          4,000
           To Bank A/c                                                    4,000
c) Bank A/c                                      Dr           4,000
           To Share Forfeiture A/c                                    4,000
d) Share Forfeiture A/c                      Dr           4,000
           To Bank A/c                                                    4,000

Answer : A

Question. Total capital specified in capital clause is Rs 50,00,000 which is divided in 35,000 equity shares of Rs 100 each and 15,000, 10% preference shares of Rs 100 each. The company issued 10,000 equity shares and 5,000 preference shares. The public subscribed for 9,000 equity shares and 4,500 preference shares out of the issued shares. What will be the subscribed capital amount?
a) Rs 50,00,000
b) Rs 50,000
c) Rs 9,00,000
d) Rs 13,50,000

Answer : D

Question. Nominal share capital is
a) that part of the authorised capital which is issued by the company
b) the amount of capital which is actually applied for by the prospective shareholders
c) the maximum amount of share capital which a company is authorised to issue
d) the amount actually paid by the shareholders

Answer : C

Question. Which document is an invitation offer to public to subscribe for company’s share?
a) Red herring prospectus
b) Prospectus
c) In lieu of prospectus
d) None of the above

Answer : B

Question. Money received in advance from shareholders before it is actually called-up by the directors is
a) debited to calls-in-advance account
b) credited to calls-in-advance account
c) debited to calls account
d) None of the above

Answer : B

Question. A company issued 25,000 shares and received applications for 35,000 shares. Company wants to allot shares to everyone who has applied. What will be the ratio for allotment?
a) 6 : 7
b) 7: 5
c) 5 : 7
d) 7: 6

Answer : C

Question. Akash Ltd. registered capital is Rs 50,00,000 in shares of Rs 10 each. The company issued 2,00,000 of such shares, payable @ Rs 3 per share on allotment. What will be the amount due on allotment, if shareholder holding 20,000 shares paid all call money at the time of allotment only?
a) Rs 4,00,000
b) Rs 6,00,000
c) Rs 60,000
d) Rs 1,50,000

Answer : B

Question. The profit on reissue of forfeited shares is transferred to
a) general reserve
b) capital redemption reserve 
c) capital reserve
d) revenue reserve

Answer : C

Question. Amox Ltd. is registered with a capital of 10,00,000 equity shares of Rs 10 each. 6,00,000 equity shares were offered for subscription to public. Applications were received for 6,00,000 shares. All calls were made and amount was duly received except final call of Rs 2 on 80,000 shares. What will be the amount of share capital shown in the balance sheet?
a) Rs 60,00,000
b) Rs 58,40,000
c) Rs 5,84,000
d) Rs 6,00,000

Answer : B

Question. Amount payable on shares can be received in installments by the company. What is the first installment called?
a) Application money
b) Allotment money
c) First call money
d) Second call money

Answer : A

Question. Issued 10,000 shares of Rs 100 each to the Narayan Ltd. @10% premium and paid Rs 2,00,000 in cash for a consideration of running business purchased. Journalise this transaction.
a) Narayan Ltd.                    Dr 13,00,000
     To Share Capital A/c                                     10,00,000
     To Securities Premium Reserve A/c                1,00,000
     To Cash A/c                                                 2,00,000
b) Narayan Ltd.                     Dr 13,00,000
    To Share Capital A/c                                      13,00,000
c) Narayan Ltd.                     Dr 13,00,000
     To Cash A/c                                                  13,00,000
d) Share Capital A/c              Dr 10,00,000
    Securities Premium
    Reserve A/c                       Dr 1,00,000
    Cash A/c                           Dr 2,00,000
     To Narayan Ltd.                                             13,00,000

Answer : A

Question. The subscribed share capital of XYZ Ltd. is Rs 80,00,000 divided in shares of Rs 100 each. There were no calls-in-arrears till the final call was made. The final call was paid on 77,500 shares. The calls-in-arrears amounted to Rs 62,500. Calculate the final call per share.
a) Rs 20
b) Rs 30
c) Rs 25
d) Rs 35

Answer : C

Question. Which amongst the following shares conter voting rights on its holders?
a) Equity shares
b) Redeemable preference shares
c) Participatory preference shares
d) None of the above

Answer : A

Question. Pass the journal entry for amount of first call, Rs 90,000 received after deducting calls-in-arrears of Rs 6,000.
a) Bank A/c                                 Dr     90,000
    Calls-in-arrears A/c                  Dr      6,000
              To Share First Call A/c                         96,000
b) Share First Call A/c                  Dr     96,000
              To Bank A/c                                       90,000
              To Calls-in-arrears A/c                         6,000
c) Bank A/c                                  Dr    96,000
             To Share First Call A/c                         96,000
d) None of the above

Answer : A

Question. Neton Ltd. has in its memorandum of association, capital clause stating that it is formed with 75,000 equity shares of Rs 100 each. The company has issued the entire shares and the public has also subscribed and paid-up for the full amount on application itself. What will be the subscribed capital?
a) Rs 75,00,000
b) Rs 10,00,000
c) Rs 1,00,000
d) Rs 7,50,000

Answer : A

Question. If the purchase consideration is more than net worth, then which account will be debited for the difference amount?
a) Capital Reserve A/c
b) Asset A/c
c) Goodwill A/c
d) Vendor A/c

Answer : C

Question : The subscribed share capital of S Ltd. is ₹ 50,00,000 of ₹ 100 each. There were no calls in arrear till the final call was made. The final call made was paid on 42,500 shares. The calls in arrear amounted to ₹ 1,12,500. The Final Call on share :-

Question. E Ltd. Had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The amount payable on application was Rs. 5. F applied for 420 shares. What will be the number of shars allotted and the amount carried forward for adjustment against allotment money due from F in case of pro-rata allotment?
Answer: Shares Allotted: \(300\); Amount adjusted against allotment: \(\text{Rs. } 240\).

Question. State two essential features of a Private company
Answer: Two essential features of a private company are:
(i) It restricts the right to transfer its shares.
(ii) It limits the number of its members to 200 (exclusive of past and present employees).

Question. Rajdhani Ltd., issued 50,000 shares of Rs. 10 each at a premium of 10% payable as Rs. 2 per share on application, Rs. 3 on allotment and Rs. 3 each on first and final call. Applications were received for 70,000 shares. It was decided that:
(a) Refuse allotment to the applicants for 10,000 shares
(b) Allot 20,000 shares to Mohan who had applied for similar number and
(c) Allot the remaining shares on pro-rata basis.
Mohan failed to pay the allotment money and Sohan whho belonged the category ‘C’ and was allotted 3,000 shares paid both the calls with allotment. Calculate the amount received on allotment.
Answer:
Working Notes:
1. Category of Allotment:

• Category A (Rejected): Applied \(10,000\) shares, Allotted \(Nil\).
• Category B: Mohan Applied \(20,000\) shares, Allotted \(20,000\) shares.
• Category C (Pro-rata): Remaining Applied \(40,000\) shares \((70,000 - 10,000 - 20,000)\), Allotted \(30,000\) shares \((50,000 - 20,000)\).

Ratio of Category C = \(40,000 : 30,000 = 4:3\).

2. Mohan (Category B):
Mohan was allotted \(20,000\) shares. He did not pay allotment money. Since he belongs to Category B (full allotment), there is no excess application money adjusted.
Allotment money due but unpaid from Mohan = \(20,000 \times \text{Rs. } 3 = \text{Rs. } 60,000\).

3. Sohan (Category C):
Sohan was allotted \(3,000\) shares.
Shares applied by Sohan = \(3,000 \times \frac{4}{3} = 4,000\) shares.
Application money paid by Sohan = \(4,000 \times \text{Rs. } 2 = \text{Rs. } 8,000\).
Application money adjusted on allotment = \(3,000 \times \text{Rs. } 2 = \text{Rs. } 6,000\).
Excess application money to be adjusted on allotment = \(\text{Rs. } 8,000 - \text{Rs. } 6,000 = \text{Rs. } 2,000\).
Allotment due on Sohan's shares = \(3,000 \times \text{Rs. } 3 = \text{Rs. } 9,000\).
Net allotment money due from Sohan (after adjusting excess) = \(\text{Rs. } 9,000 - \text{Rs. } 2,000 = \text{Rs. } 7,000\).
Calls paid in advance by Sohan with allotment = \(3,000 \text{ shares} \times (\text{Rs. } 3 \text{ first call} + \text{Rs. } 3 \text{ final call}) = 3,000 \times \text{Rs. } 6 = \text{Rs. } 18,000\).

4. Category C (excluding Sohan):
Excess application money of Category C adjusted on allotment:
Excess applications = \(40,000 - 30,000 = 10,000\).
Excess application money = \(10,000 \times \text{Rs. } 2 = \text{Rs. } 20,000\).
Total allotment due for Category C = \(30,000 \times \text{Rs. } 3 = \text{Rs. } 90,000\).
Net allotment due from Category C (after adjusting excess) = \(\text{Rs. } 90,000 - \text{Rs. } 20,000 = \text{Rs. } 70,000\).

5. Calculation of Total Amount Received on Allotment:

Question. (a) Amrit Ltd. Has a paid up share capital of Rs. 10 Crore and a balance of Rs. 2 Crore in Securities Premium Acount. The company management do not want to carry over this balance. State the purposes for which this balance can be utilised.
Answer: According to Section 52(2) of the Companies Act, 2013, the securities premium account balance can be utilised for the following purposes:
1. In writing off the preliminary expenses of the company;
2. In writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company;
3. In providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company;
4. In purchasing its own shares or other securities (buy-back) under Section 68;
5. In issuing fully paid bonus shares to the members of the company.

Question. Star Ltd. Was registered with a capital of Rs. 4,00,000 in shares of Rs. 100 each. It issued 2,000 of such shares payable Rs. 25 per share on application; Rs. 25 on allotment; Rs. 20 on first call, and the balance as and when required. All moneys payable on application and allotments were duly received; but when the first call of Rs. 20 per share was made, one shareholder holding 100 share failed to pay the amount due and another shareholder holding 200 shares paid them in full. Record these transactions in the journal and also show the Share Capital in the Balance Sheet of Star Ltd.
Answer:
JOURNAL OF STAR LTD.

Note: Last two entries may also be combined.

EXTRACT OF BALANCE SHEET OF STAR LTD. as at...

Note to Accounts:
(1) Share Capital

Hint: In this question second call is not made by directors, hence the entries are to be recorded only up to the first call.

Question. Why would an investor prefer to invest in the Debentures of a Company rather than in its Shares?
Answer:
(i) Interest on debentures is payable irrespective of the company making a profit or incurring a loss whereas dividend on shares is paid only when the company makes profit.
(ii) Debentures are mostly secured whereas a share is always unsecured.

Question. B Ltd. Forfeited 300 shares of Rs. 100 each, Rs. 70 called up, for non-payment of first call of Rs. 20 per share. Out of these, 200 shares were reissued for Rs. 60 per share as Rs. 70 paid up. What is the amount to be transferred to Capital Reserve Account?
Answer: Rs. 8,000

Question. R. K. Ltd. invited applications for issuing 70,000 Equity Shares of Rs. 10 each at a premium of Rs. 35 per share. The amount was payable as follows :
On Application: Rs. 15 (including Rs. 12 premium)
On Allotment: Rs. 10 (including Rs. 8 premium)
On First and Final Call: Balance
Applications for 65,000 shares were received and allotment was made to all the applicants. A shareholder, Ram, who was allotted 2,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards, the first and final call was made. Sohan, who had 3,000 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 4,000 shares were re-issued at Rs. 50 per share fully paid up. The re-issued shares included all the shares of Ram. Pass necessary journal entries for the above transactions in the books of R. K. ltd.
Answer:
In the Books of R.K. Ltd.
JOURNAL

Note (1): Calculation of Capital Reserve
Amount forfeited on Ram's shares = \(6,000\)
Amount forfeited on Sohan's shares = \(\frac{\text{Rs. } 15,000 \times 2,000}{3,000} = 10,000\)
Profit on re issue transferred to capital reserve = \(\text{Rs. } 16,000\)

Question. D Ltd. purchased Machinery for Rs. 10,00,000 and a Motor Van for Rs. 5,00,000 from E Ltd. on 1-1-2012, Rs. 3,60,000 were paid immediately and the balance was paid by issue of 9,500 fully paid equity shares of Rs. 100 each. Pass the necessary Journal entries for recording the transactions in the books of D Ltd.
Answer:
JOURNAL OF D LTD.

Question. C Ltd. forfeited 1,000 shares of Rs. 100 each issued at par. On these shares the first call of Rs. 30 per share was not received and the final call of Rs. 20 per share was yet to be called. Out of these, 60 shares [sic: 600 shares] were subsequently re-issued Rs. 80 paid up at a price that Rs. 27,000 was transferred to Capital Reserve. Give journal entries to record the forfeited and re-issue of shares and open share forfeited account in the books of C Ltd.
Answer:
IN THE BOOKS OF C LTD.
JOURNAL

Dr. FOREFEITED SHARES ACCOUNT Cr.

Working note:
Profit on 600 forfeited shares = \(\frac{50,000 \times 600}{1,000} = \text{Rs. } 30,000\)
Less: transfer to capital reserve = \(\text{Rs. } 27,000\)
Loss on reissue = \(\text{Rs. } 3,000\)
Loss on reissue per share = \(3,000 \div 600 = \text{Rs. } 5\)
Hence, reissue price = \(\text{Rs. } 80 - \text{Rs. } 5 = \text{Rs. } 75\)

Question. Ganga Ltd. issued 60,000 shares of Rs. 10 each at a premium of 20% payable as follows : On Application Rs. 5 *(including premim) : On Allotment Rs. 3; and on First and Final call Rs. 4. The Company received applications for 75,000 shares and allotment was made as follows :
List I: Applicants for 40,000 shares were allotted in full.
List II: Applicants for 25,000 shares were allotted 20,000 shares.
List III: Applicants for 10,000 shares were allotted Nil Shares.
A Shareholder to whom 200 shares were allotted under List I paid full amount due on shares alongwith money. Another shareholder holding 600 shares failed to pay subsequently re-issued as fully paid @ Rs. 11 per share. Expenses of issue came to Rs. 20,000 which were fully written off against securities premium A/c. Pass journal entries and show the ‘Share Capital’ in the balance sheet of Ganga Ltd.
Answer:
Ganga Ltd.
JOURNAL

EXTRACT OF BALANCE SHEET OF GANGA LTD. as at...

Notes to accounts:

Note (2) Profit on 600 shares = Rs.3,600
Hence, profit on 500 shares = \(\frac{\text{Rs. } 3,600}{600} \times 500 = \text{Rs. } 3,000\)

Note (3) profit on the forfeiture of 600 shares is Rs. 3,600. Out of this amount, profit on the re-issue of 500 shares Rs. 3,000 has been transferred to capital reserve. The balance of Rs. 600 will be shown on the equity and liabilities side of the balance sheet under the head ‘share capital’.

Question. Pragya Ltd. invited applications for 10,000 shares of Rs. 100 each at a premium of Rs. 10 each payable as follows :
Rs. 50 per share on Application
Rs. 35 per share on Allotment and
Balance on first and final call
Applications for 16,500 shares were received. Applications for 4,000 shares were rejected and allotment was made on pro-rata basis to the remaining applicants. Ankur who had applied for 250 shares failed to pay the amount due on allotment and call. Company forfeited his shares. Later on, out of the forfeited shares company reissued 100 shares at Rs. 105 per share fully paid up. Pass necessary Journal Entries in the books of Pragya Ltd.
Answer:
journal of pragya ltd.

Working note:
(1) (A) No. of shares allotted to Ankur = \(\frac{10,000}{12,500} \times 250 = 200 \text{ shares}\)
Excess application money received from Ankur = \(250 \text{ shares} - 200 \text{ shares} = 50 \text{ shares}\)
Excess application money = \(50 \text{ shares} \times \text{Rs. } 50 = \text{Rs. } 2,500\)

(B) Allotment money due from Ankur (\(200 \times \text{Rs. } 35\)) = \(\text{Rs. } 7,000\)
Less: excess application money received from Ankur = \(\text{Rs. } 2,500\)
Allotment money not received from Ankur = \(\text{Rs. } 4,500\)

(C) Total amount due on allotment (\(10,000 \times \text{Rs. } 35\)) = \(\text{Rs. } 3,50,000\)
Less: allotment money already received on application stage = \(\text{Rs. } 1,25,000\)
Net allotment money due = \(\text{Rs. } 2,25,000\)
Less: allotment money due but not received from Ankur = \(\text{Rs. } 4,500\)
Total allotment money received = \(\text{Rs. } 2,20,500\)

(2) Calculation of amount to be transferred to capital reserve:
Amount forfeited on re-issued shares (\(12,500 \times \frac{100}{200}\)) = \(\text{Rs. } 6,250\)
Less: re-issued discount = \(NIL\)
Profit on re-issue to be transferred to capital reserve = \(\text{Rs. } 6,250\)

Question. x Ltd. has its share capital divided into shares of Rs. 10 each. On 1st April, 2014 it granted 10,000 employees stock options at Rs. 40, when the market price was Rs. 130. The options were to be exercised between 15th March, 2015 and 31st March, 2015. The employees exercised their options for 9,000 shares only, the remaining options lapsed. The company closes its books on 31st March every year. Pass entries.
Answer:
X Ltd.
JOURNAL ENTRIES